Amtel-Vredestein shareholders pass reverse -takeover proposal

By David Shaw, ERJ staff

Amsterdam, Netherlands -- Shareholders in Amtel-Vredestein have passed the resolution permitting a reverse take-over of the company by Sibur Russian Tyres. Igor Karavaev, member of the main board at SRT said the shareholders had expressed confidence in the new management to take the merged company forward.

While this clears the way to the deal completing, there are still some administrative issues to overcome, and representatives of both A-V and SRT said they did not expect the deal to complete before the middle of December this year. Once completed, it is expected that the new chief executive will be Vadim Gurinov, supported by Karavaev and Dmitry Sokov of SRT, together with Rob Oudshoorn, Marc Luyten and Kornelis (Kees) Hettema, who all remain in position. Petr Zolotarev, Vadim Pesochinsky and Ilya Ivanov will resign from Amtel-Vredestein's board.

Karavaev said the new management could not formally take over the running of the company until the deal has completed, but in the meantime, the two managements are working together to develop a joint approach to managing the two businesses.

The first consequence of the agreement is that SRT will release the second tranche of interim financing capital to A-V during the coming week. This sum of $20 million will be used to buy raw materials to re-start the Kirov plant which has been idle for the last two weeks, due to lack of raw materials. Karavaev said tyre plants are rouitinely shut down for maintenance, and A-V had used the period of shutdown to perform routine tasks at the plant, so the effect had not been damaging.

A second consequence is that there are concrete plans afoot to bring the Voronezh II plant on stream. Karavaev said it is likely to take about 12 months after the deal has completed before the plant is making tyres.

He said the steep increases in raw materials prices, notably BR and SBR had affected profitability and cash-flow throughout the tyre industry, and this had been a major contributor to the cash-flow problems at Amtel-Vredestein, leading to the periodic and temporary shutdown of some of the A-V factories. Although the premium tyre makers had been able to raise prices to compensate for the increases, it was more difficult for tyre makers in the lower segments of  the market to increase prices.

Satement from Amtel-Vredestein