Uralvagonzavod continuing joint venture talks with Kazakhstan's KTZ
YEKATERINBURG. July 15 (Interfax) - OJSC Uralvagonzavod (UVZ), a major Russian tank and railcar producer, is continuing negotiations with Kazakhstan's national railway company KTZ on setting up a joint venture in the Central Asian country to build railcars, UVZ chief executive Oleg Siyenko told Interfax.
"We are continuing to work on this, how to find common ground. So far this is a one-way road," Siyenko said.
He said UVZ has not managed to reach an agreement with KTZ due to changes in the structure of the Kazakh company's assets. "The structure of the assets that we wanted to acquire in this company has changed six times. The second thing about this plant: we hired an international auditing company that prepared the deal. Unfortunately, it couldn't carry out its work to the end, because the Kazakh side gave us different parameters, different assets and so on. We though we'd arrived nowhere," Siyenko said.
National daily Kommersant reported earlier that UVZ had not managed to reach an agreement with KTZ on setting up the joint venture. In two years of talks, the companies could not agree on the structure of the joint venture, the paper reported its source as saying.
Siyenko said on Thursday that the company had run into difficulties launching production of freight cars in Kazakhstan. UVZ expected to set up production with Kazakh partners in the city of Ekibastuz. In order to do so, UVZ needed to become a shareholder of the plant, but Siyenko said the Kazakh parties had an "unconstructive approach to these issues."
The negotiations "hit a dead end" because the parties "never managed to determine the final configuration of the JV," the paper quoted a source familiar with the situation as saying. "The Kazakh side repeatedly changed the parameters of the deal," he said.
Another source said the "problem could have been differences on the price." He said "UVZ might have factored its contribution to the modernization of the plant into the valuation, which the Kazakh side might have been unhappy about." The Ekibastuz plant was modernized with the help of Tekhvagonmash, a Ukrainian company controlled by UVZ.
"They began delivering equipment even before the start of the deal, at the stage of creating the railcar production facility in Ekibastuz, but taking into account future plans to expand capacity, UVZ might have offered a price that was lower than the Kazakh side expected," the paper quoted another source as saying.
UVZ signed an agreement with KTZ in November 2011 on investment in transport engineering plants. "The goal of the document is UVZ's intent to acquire stakes in KTZ assets - JSC Vostokmashzavod (Ust-Kamenogorsk) and LLP Kazakh Railcar Company (Ekibastuz)," UVZ said.
UVZ earlier planned to build a plant in Kazakhstan to produce rolling stock.
