Ukrainian state holding, Chinese firms strike deal to jointly control Motor Sich

Ukrainian state military industrial corporation Ukroboronprom
and Chinese firms Skyrizon Aircraft and Xinwei Technology Group reached an
agreement to jointly control Motor Sich (MSICH UK), Interfax-Ukraine reported
on Aug. 19, citing anonymous sources in the government. The Chinese firms will
control a more than 50% stake in Ukraine’s largest producer of aircraft
engines, and will grant USD 100 min to Ukraine’s aviation industry, while
Ukroboronprom will have a more than 25% stake. The deal is yet to be approved
by Ukraine’s Antimonopoly Committee, Interfax-Ukraine reported.

Recall, a Chinese citizen who was the owner of Beijing
Skyrizon Aviation Industry Investment, a Chinese company, tried to purchase a stake of
up to 48.8% in Motor Sich from its president Viacheslav Boguslayev in 2016, but
the deal has been blocked by Ukraine’s Security Service, which also froze all Motor Sich shares from trading
in April 2018.

The Chinese firms were planning to construct an engine
assembly plant on Chinese territory with the use of Motor Sich parts and
technologies, which Ukraine’s law enforcement bodies considered to be a threat
to the country’s security.

Alexander Paraschiy: This business deal can only be welcomed by the investment community.
The situation with the alleged security threats and share freeze was very
strange, damaging the country’s investment image, particularly among the
Chinese. It was also especially damaging for the image of Motor Sich, among the
few Soviet-era military producers in Ukraine that preserved their scientific
potential. Motor Sich should be able to help revive the stalled local stock
market after a positive decision by the Antimonopoly Committee and
redistribution of shares among Chinese and Ukrainian companies.