By Emil DanielyanThe government approved and unveiled on Friday a complex deal that will lead to the sale of Armenia’s largest chemical enterprise, which has been struggling to remain afloat since the Soviet collapse, to an obscure British-registered company.
A government statement issued after a weekly cabinet session chaired by President Robert Kocharian said the core production facilities of the state-owned Nairit plant will be sold to Rhinoville Property Limited for $40 million. It said the Armenian Energy Ministry, which owns 90 percent of the plant through a state-run gas company, will retain control over one of Nairit’s debt-ridden divisions and will pay the new owner $34 million for that.
The statement did not explain why the government decided to keep Nairit-2 and thereby nullified the bulk of the revenues resulting from the privatization. Nairit-2 had been set up and structurally separated from the plant to assume its huge debts that totaled $54 million as December 2002. The restructuring was meant to make the aging facility more attractive to foreign investors.
The statement said the deal was approved after an acquisition offer and “investment program” submitted by Rhinoville. It did not specify any details of that program.
Nor is it clear who owns Rhinoville. An online catalogue of British companies contains scant information about the company, saying only that it was registered in Tiverton, a small town in England, in December 2002. Rhinoville apparently has no website.
Another British-based company, Ransat Group, already tried to revitalize Nairit when it signed a management contract with the Armenian government in early 2002, pledging to invest $25 million in the chemical giant within the next five years. However, the deal collapsed several months later, with each other side accusing the other of failing to honor its contractual obligations.
Nairit was then taken over by an Armenian commercial bank in payment for its $14 million debt to the latter. However, the bank itself went bankrupt in 2003, leading the Armenian authorities to effectively nationalize the sprawling factory located on the southern outskirts of Yerevan. A Russian industrial group briefly managed it in 2004 before deciding to pull out.
Nairit, which mainly produces synthetic rubber and employed thousands of people in Soviet times, has largely stood idle since then. Trade and Economic Karen Chshmaritian announced recently that it will be reactivated in the second half of this year.