Motor Sich plant in Belarus to be nationalized, president says

The Orsha Aircraft Repair Plant, in which Ukrainian
aeronautics firm Motor Sich (MSICH UK) had a 60% stake, will be returned to the
state, Belarusian President Aleksandr Lukashenko stated in a July 11 press
release. “This is a state enterprise as of today,” Lukashenko said. An
anonymous representative of Motor Sich management commented to Interfax-Ukraine
the same day that Lukashenko’s decision to nationalize the Orsha plant “will be
resolved with Motor Sich in the near future.”

Motor Sich purchased its 59.5% stake in the Orsha plant in 2012,
with a 39.6% stake purchased by a Belarusian firm. The investors committed to
invest at least USD 12 mln into the plant by 2017. Since 2012, Motor Sich has
invested USD 20 mln into the plant in various forms, according to Motor Sich
president Vyacheslav Boguslayev.

Alexander Paraschiy: The Orsha
plant could have been a solid platform for Motor Sich to expand its presence on
the Russian and Belarusian aircraft service market, providing stable political
relations. Since Russia launched its military aggression against Ukraine in
2014 however, the opportunities for Motor Sich to cooperate with Russian firms
in aeronautics and defence has become practically impossible.

Therefore, the Orsha plant has lost its importance
for Motor Sich, which has no grounds to invest any further in the plant. From
this standpoint, the decision to return the plant to the Belarusian government
(regardless of who initiated it) looks logical, assuming that Motor Sich is
compensated in some way for its stake. We see no effect on Motor Sich
fundamentals from the loss of the plant, even without compensation for Motor
Sich, which can only come as a benefit.