Conti puts Russia project on hold

Hannover, Germany--Continental AG has put its joint venture with Moscow Tire on hold for the forseeable future. The project has been subject to a series of delays and problems since it was signed in September 2002. The latest row concerns a comment from central government which appears to question the future of large-scale industrial operations in residential areas, notably in Moscow city.

A spokesman for Continental said that although there have been many delays in the project for a variety of reasons, each of them could have been overcome separately.

The latest pronouncement from State authorities, however, appears to contradict assurances of continued long-term production given by the local Moscow authorities. It is this contradiction that has caused Conti to freeze all further activity on the project until these questions have been resolved, said the spokesman.

Currently, therefore, Conti is in deep, very serious discussions with its joint venture partner over the future of the operations at the Moscow Tire Plant.

The spokesman said the risk is relatively limited. The maximum risk Conti is exposed to over this project is "under €10 million" said the spokesman. This would have no significant effect on Conti's financial figures, he said.

The Frankfurter Allgemeine Zeitung carries a long report, based on an interview with Hans-Joachim Nikolin, board member at Conti, in which it quotes Nikolin describing the €30 million project as, "a fiasco."

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Frankfurter Allgemeine (Germany) story (In German Language)

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