Ukraine to cancel sale of Motor Sich to Chinese investors in March, media report

A final decision by Ukraine’s Antimonopoly
Committee to stop the sale of Motor Sich (MSICH UK), the leading aviation
engines producer, to Beijing Skyrizon Aviation is expected in March, a
buzzfeednews.com article of Feb. 18 states citing a Ukrainian official.
According to the source, this could open an opportunity for US-based Oriole
Capital Group to acquire Motor Sich. Hossein Mousavi, managing partner of Oriole,
confirmed to buzzfeednews.com the firm’s interest in the acquisition,
describing Motor Sich as a “gem.”

Recall, people aligned with Beijing Skyrizon
Aviation Industry Investment entered a deal with key Motor Sich owner
Viacheslav Boguslayev in 2016, based on which Chinese firms have concentrated
at least a 56% stake in the company. However, in 2017, the deal was blocked by
the Antimonopoly Committee and Ukraine’s State Security Service which “found” signs of sabotage and state treason in the deal. Since then, the shares of Motor Sich
have been banned from free trading, and the antitrust agency is studying the
case. Besides the Ukrainian authorities, the deal caught the attention of top
U.S. officials who see a threat to their national security from the acquisition of Motor Sich by China. Last
year, media reported that Erik Prince, a U.S. private security contractor and
“at least one other potential buyer” were approached
by the Trump administration on the
Motor Sich issue.

Alexander Paraschiy: From a political standpoint, a U.S.-based investor
for Motor Sich is much more preferable for the Ukrainian government. Therefore,
it’s possible that the Antimonopoly Committee will refuse the Chinese firm from
concentrating a control stake in Motor Sich. In our view, selling the stake to
Beijing Skyrizon Aviation would be much more beneficial for Boguslayev than
selling to a small U.S.-based firm. However, Boguslayev has lost his political
leverage in Ukraine and therefore is no longer a decision-maker in this story.
Regardless, either solution (the entrance of a Chinese or American investor)
would be much more beneficial for Motor Sich value than the current situation,
in which Motor Sich is losing orders and is being under constant pressure from
law enforcement bodies.