By Atom MarkarianA Russian industrial group, Volgoburmash, purchased on Friday Armenia’s largest chemical company for an undisclosed amount of cash, promising to restore its Soviet-era production levels.
The takeover agreements were signed in Yerevan by a senior Volgoburmash executive, Mikhail Zavetyaev, and representatives of an Armenian commercial that owned the struggling Nairit giant.
“Our first major objective is to regain the huge Russian market of Nairit consumers which Nairit used to have in Soviet times,” Zavetyaev told reporters. He said that should bring the annual output of Nairit’s main product, synthetic rubber, to 75,000 tons. The sprawling Yerevan factory has produced only 3,000 tons of rubber since last September.
The signing of the deal followed a ten-month trial period during which Nairit was managed by Volgoburmash. The Russians claim to have already invested $3 million. Zavetyaev said the amount of further capital investments will be determined after a comprehensive audit of the aging plant’s financial and technical condition. He also refused to reveal the takeover price, saying that it is a “commercial secret.”
Nairit was handed over to the private Haykap bank last May after failing to repay its $14 million debt to the latter. Haykap has itself been facing bankruptcy and is currently administered by the Central Bank of Armenia.
Nairit used to employ thousands of people and fell into decline following the Soviet collapse that cut it off from its traditional markets. Only a fraction of its workforce remains employed. The plant owes its workers $5.7 million in unpaid wages.
A foreign investor, the British-registered Ransat Group, has already tried unsuccessfully to breathe a new life into Nairit. Under a management contract signed with the Armenian government in early 2002, Ransat pledged to invest $25 million within the next five years. However, the deal effectively collapsed several months later, with each other party accusing the other of failing to honor its contractual obligations. Ransat eventually agreed to surrender control of Nairit.
With an annual business turnover of $200 million, Volgoburmash specializes in the manufacturing of drilling equipment for oil and gas industries. The group is also involved in the construction and pharmaceutical sectors, and owns two banks in Russia.