10:16 06.08.2020

Beijing Skyrizon's subsidiary, DCH Group submit new application to competition agency seeking to buy Motor Sich

3 min read
Beijing Skyrizon's subsidiary, DCH Group submit new application to competition agency seeking to buy Motor Sich

Subsidiary Beijing Skyrizon and DCH Group of Ukrainian businessman Oleksandr Yaroslavsky and its affiliated companies jointly submitted a new application to the Antimonopoly Committee of Ukraine on August 4 to buy Motor Sich shares, Beijing Xinwei Technology Group Co., Ltd said in a statement on the Shanghai Stock Exchange on Thursday night.

"The change of new cooperation partners will not entail significant changes in the subsequent reorganization. Beijing Skyrizon hopes that this change will push for the earliest possible approval of the regulator, and will contribute to the early completion of a major restructuring of domestic assets," the company said in the announcement.

Xinwei said that on the same day, its subsidiary Beijing Skyrizon withdrew its statement that it had previously submitted together with the Ukroboronprom state concern from the Antimonopoly Committee.

"Due to the changes in the basis of business cooperation between Beijing Skyrizon and its subsidiaries and Ukroboronprom Group, Beijing Skyrizon negotiated cooperation in the field of aircraft engines with DCH Group Ukraine and its subsidiaries, and came to an agreement," the company said.

Xinwei recalled that on July 9, 2019, the Antimonopoly Committee of Ukraine announced the opening of a case at the request of Skyrizon Aircraft Holdings Limited (British Virgin Islands) and Ukroboronprom on obtaining joint control over PJSC Motor Sich. The committee sent requests to the participants in the concentration, to which answers were given. However, on June 18, 2020, the committee sent a new series of requests.

Xinwei also said that the subject of the transaction and the shares of the target assets are frozen, so the success of this reorganization is still in question.

According to the report, DCH Group is one of the most important industrial financial groups in Ukraine, uniting metallurgy, mining, engineering, infrastructure, financial and other industries.

According to a source in the government, currently about 75% of Motor Sich's shares are already owned by a group of Chinese owners, and the Antimonopoly Committee was considering the issue of agreeing on a deal to purchase this stake from them by Skyrizon and Xinwei Technology with further free transfer of 25.00002% shares to Ukroboronprom. At the same time, the disputed stake in Motor Sich is used as collateral for financing provided, inter alia, by China Development Bank.

John Bolton, the then national security adviser to the U.S. President, said about the concern of the United States about the sale of Motor Sich to Chinese companies during a visit to Kyiv late August 2019.

At the end of last year, the then U.S. Chargé d'Affaires a.i. in Ukraine, William B. Taylor said the United States was looking forward to a new deal to attract a U.S. or other investor to Motor Sich so that the company would not be sold to the Chinese buyer.

The shares of Motor Sich have been frozen since April 2018 under a petition of an investigator of the SBU seeking to safeguard material evidence in a criminal case opened in July 2017.

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