More Saber Rattling From Russia Concerning Motor Sich?

Yesterday, Russia’s Military Industrial Commission, lead by Defense Minister Sergey Ivanov, recommended that the Russian government take steps to organize the serial production of helicopter motors, currently produced by Motor Sich (MSICH: BUY), in Russia. The commission wants all engines for military vehicles to be produced exclusively on Russian territory by 2009. Olha Pankiv: We believe the move is possible from the political point of view, though not financially expedient for Russia. It is likely that Russia is pressuring Motor Sich for walking out of meetings with Russia’s Oboronprom, which wanted to acquire a stake in MSICH outright or to exchange shares with a new Russian aircraft engine holding, which is currently being created. MSICH, which recently announced plans to hold and IPO for 3-5% of its statutory fund in 2Q07, will likely return to the negotiating table after its IPO, as a deal would be beneficial for both sides.