Business News, 15/11/2017

Ukroboronprom Gets Lump Investment for Kharkiv Aircraft Plant

On November 13 Ukroboronprom State Concern announced $150 million investment by the U.S.-based Oriole Capital Group for Kharkiv State Aircraft Manufacturing Company.

According to the Ukroboronprom, the parties have reached the agreement during the international exhibition Dubai Airshow 2017 taking place in the United Arab Emirates now.

The long-term agreement implies a batch production of Ukrainian An-74 aircraft, including its modifications, and the production facilities modernization at the Kharkiv State Aircraft Manufacturing Company. In turn, Oriole Capital Group will invest in An-74 production, upgrading, and sales.

The company is also supposed to get orders for the aircraft spare parts, maintenance, and pilot training.

However, yesterday, November 14, volunteer investigation agency InformNapalm wrote that very little information was found about the company Oriole Capital Group. The first news about this company only appeared in connection with $150 million investment in the Kharkiv plant. There have not been any entries on the company’s website till November 13, when the news about the investments was spread in Ukraine for the first time.

Also, the InformNapalm article author Anton Pavlushko pointed out the cheap website design which was inappropriate for a wealthy company investing a lump sum. The company address appeared to be virtual, and the managers’ names were of Middle East origin, e.g., Oriole Capital Group CEO Hossein Mousavi.

“I think it’s one of the ways by which investors from the Middle East are entering Antonov,” says journalist Anton Pavlushko. “It is noted that Oriole Capital Group was founded by executives from Wamar International. This company has long-term experience and connections in the Middle East, where Antonov has already been implementing its An-132 project.  Now they can get engaged in the An-74 project, which is beneficial for Ukraine.”

In general, the news is optimistic and positive, journalists of InformNapalm say. Also, $20,000 were paid for Oriole Capital Group lobbying in the US Senate several weeks ago, which is a respectable approach. However, the journalists remind that state agencies should provide more information about the investors to the Ukrainian state-owned enterprises during the hybrid war with Russia.

It is worth noting that Ukroboronprom responded to the InformNapalm article the same day, November 14. The detailed information about investors and the agreement was published. In the publications Oriole Capital Group was presented as SPV – special purpose vehicle – which was created particularly to implement the project with the Kharkiv State Aircraft Manufacturing Company and to accumulate resources from different types of investors, funds and overall project management. “This is a common world practice,” the representatives of Ukroboronprom State Concern say.

agreement

The Ukroboronprom states this investment agreement is crucial for Ukraine and the Kharkiv plant which has incurred losses for five years already. For the first time, the enterprise has engaged the powerful international investor that is going to cooperate for many years.

Reference: The An-74 aircraft was developed in 1983. It can transport up to 52 people or 10 tons of cargo. Its crew consists of two pilots. The aircraft speeds up to 720 kilometers per hour with a maximum range of 2,700 kilometers.

Text: Olena Sokolynska, Natalia Ivanova

Photo: Ukroboronorom