Page 83 - UKRRptOct20

9.2.12 ​Other sector corporate news
Ducking the issue: Ukraine’s Antimonopoly Committee has declined to consider an application by Kharkiv’s DCH Group to purchase Motor Sich shares from China’s Skyrizon​ to run the Zaporizhia aircraft engine factory as a Chinese-Ukraine joint venture. The decision was made public yesterday, five days after US Secretary of State Michael Pompeo called President Zelenskiy and warned about “malign” Chinese investment. DCH, which also makes tractors, complained that the Committee’s requested information “not related to the core business” of the jet engine maker. DCH asked: Can Motor Sich “potato planters, potato diggers, harrows, plows, cultivators, mounted rotary mowers” be attached to DCH tractors?
The Chinese company Skyrizon has sent a notice of investment dispute to the Ukrainian government, Unian news agency reported on September 5. In this notice, the Chinese firm urges the government to initiate negotiations and “stop illegal activity” regarding Motor Sich​ and its shareholders. Skyrizon alleges that the Ukrainian government is breaching an agreement on the encouragement and mutual protection of investments concluded between Ukraine and China in 1992. It threatens to sue Ukraine, demanding compensation of total losses of up to $3.5bn, Unian reported. Recall, Ukraine is refusing to recognize Skyrison as a holder of a controlling stake in Motor Sich since 2017. In 2016, Skyrison reportedly accumulated an over 56% stake in Motor Sich by buying the shares from the company’s president Vyacheslav Boguslayev and his entourage. The US officials are among the fiercest ​opponents of the deal​.
China's Skyrizon, a subsidiary of Beijing Xinwei Technology Group, and Ukrainian tycoon Oleksandr Yaroslavsky's DCH Group of will submit an updated joint application for the purchase of​ ​Motor Sich​ ​to the Antimonopoly Committee of Ukraine (AMC), Interfax Ukraine reported on September 8. The previous joint application for the purchase of Motor Sich with Ukroboronprom​ state concern filed in the summer of 2019 was withdrawn due to new agreements with DCH. The company also indicated that the subject of the transaction and the shares of the target assets are frozen, therefore the successful implementation of this reorganization is still in question. According to a Ukrainian government source, about 75% of Motor Sich's shares are already owned by a group of Chinese entrepreneurs. After submitting a new application by Xinwei, the AMC notified of the consideration of four cases on the purchase of Motor Sich shares, including in that case on the purchase of shares even before the filing of Xinwei's application with Ukroboronprom, initiated by the committee on its own initiative due to lack of permission. "Based on the results of the inspection, if violations are detected, tough response measures will be taken in accordance with the current legislation," the AMC was quoted as saying by Interfax Ukraine. Meanwhile, the disputed stake of Motor Sich shares acts as a pledge for financing provided, among other things, by China Development Bank.
83​ UKRAINE Country Report​ October 2020 ​ ​www.intellinews.com