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Oboronprom United Industrial Corporation

Ul. Stromynka 27/3, Moscow, Russia
7 495 739 60 63 voice 
7 495 797 55 48 fax,

The united industrial corporation Oboronprom (part of the state corporation Rostek) ceased to exist in early 2018. The company had fulfilled its task, after which its continued existence was considered inexpedient. The company was engaged in the consolidation of helicopter and engine building assets, and fulfilled its task. Helicopters of Russia and the United Engine Building Corporation (UDK) - will be transferred to the direct management of Rostek in 2018.

Oboronprom engaged in the merger of enterprises that competed with each other in the domestic market, under the leadership of one management company. The same work was done in the part of engine building. The former head of "Oboronproma" Andrey Reus told "Kommersant" in an interview "We collected the entire intellectual and production resource of the industry, the enterprises ceased to fight among themselves and began to work in world markets."

The joint industrial corporation Oboronprom incorporated in Rostek was liquidated in Janaury 2018, once the documents for the tax authorities were ready. The liquidation procedure will be completed within a month, the relevant documents for the tax authorities are ready. The process went on in stages, for several years, Rostec said. They clarified that during this time, many employees of the company were invited to move to work in the organization of the state corporation, including its head structure.

OPK Oboronprom was established in 2002. Engaged in trade and supply of military products and services, in particular, spare parts, as well as maintenance and repair of previously supplied military helicopter equipment, including foreign markets. In 2004-2010, the helicopter industry was consolidated on the basis of the corporation, and since 2010 Oboronprom has received controlling stakes in more than 80% of engine manufacturing enterprises in Russia.

Oboronprom Corporation was one of the largest Russian diversified industrial-investment groups in the engineering and high technologies sectors. Oboronprom had been employed by the Russian state as a vehicle for the consolidation of, initially, the helicopter design and production sectors and, following this, the electronic warfare and aviation engine sectors. As a result, acquisitions have been at the core of the group's development and growth.

The Russian Federation held a 51% stake in Oboronprom; its other shareholders are Rosoboronexport (31.13%), the Republic of Tatarstan (15.07%) and Rostvertol (2.79%). The enterprises of the Corporation produced goods and provided services worth over $1.5 billion in 2007. Over 80 thousand people work for the Corporation's enterprises from Moscow to the Far East. Oboronprom was de-facto run by the state arms intermediary Rosoboronexport (ROE). The Board of Directors of the OBORONPROM Corporation was chaired by Sergey Chemezov, General Director of Russian Technologies State Corporation.

OBORONPROM United Industrial Corporation (OPK Oboronprom) was formed in 2002 as a closed joint-stock company on a parity basis with Rosoboronexport State Corporation and State Investment Corporation (Gosincor). After Gosincor liquidation in 2003, its share in the Corporation was transferred to the Federal Agency of Federal Property Management, and the Corporation was reorganized into an open joint-stock company. The paid-up authorized capital of the OBORONPROM Corporation was RUB 4.304 bln. Pursuant to Presedental decree the OBORONPROM Corporation was put in the list of Russian strategic enterprises. Pursuant to Executive Order of the RF President the Corporation was also included into the list of enterprises entitled to foreign trade activity related to defence products, namely supply of spare parts, maintenance and repair of military equipment previously delivered.

Pursuant to the Executive Order of the RF President dated November 29, 2004 and the Governmental Resolution dated May 6, 2005 the Corporation is the managing company of helicopter holding that includes: “Mil” Moscow Helicopter Plant” JSC, “Kamov” JSC, “Ulan-Ude Aircraft Plant” JSC, “Kazan Helicopter Plant” JSC, “Rostvertol” JSC, “Stupino Machine-Building Production Enterprise”, “Vpered” Moscow Machine-Building Plant” JSC, “Kamov-Holding” JSC. The “OPK” Oboronprom” also holds 75% of the “Oboronitelnye Sistemy” JSC (“Defense Systems”) shares, 100% of “Oboronpromleasing” shares and shares of other companies.

Pursuant to the Decree of the President of the Russian Federation of November 29, 2004 and the Government resolution of May 6, 2005, the Corporation was the parent (management and holding) company of a helicopter group, with 51% interest in the Corporation held by the Federal authorities. The Corporation holds a more then 75% stake in Oboronitelnye Sistemy (Defence Systems), the parent company and the core entity of International Financial Industrial Group Defence Systems. The Corporation also holds a 56% interest in Oboronpromlizing (Oboronpromleasing).

The “Oboronprom” Corporation is a multi-activity company in the field of engineering and high technologies and has several lines of activity. The first of them is a helicopter production group amalgamating the Mi and Ka helicopter developers and producers. The second one was air defence systems presented in the “Oboronprom” Corporation by the “Defence Systems” JSC. The consolidation of helicopter industry on the basis of the “Oboronprom” Corporation within the framework of the state program for reformation of the Russian defense-industry complex was completed: an operating full cycle company is established which includes all technological components and a new structure of the holding corporate management is introduced.

Operation of group of companies involved in the manufacture and sale of helicopters and air-defence systems; participation in the restructuring and reform of the Russain defence industry. Pursuant to Decree of the RF President the OBORONPROM Corporation was put in the list of Russian strategic enterprises. Pursuant to Executive Order of the RF President the Corporation was also included into the list of enterprises entitled to foreign trade activity related to defence products, namely supply of spare parts, maintenance and repair of military equipment previously delivered.

The Corporation held a more then 75% stake in OAO Oboronitelnye Sistemy (Defence Systems), the parent company and the core entity of International Financial Industrial Group Defence Systems. The Corporation also holds a 56% interest in ZAO Oboronpromlizing (Oboronpromleasing). As of 2007 the Board of Directors of the OBORONPROM Corporation was chaired by Sergey V. Chemezov, General Director of Rosoboronexport State Corporation. The General Director was Denis V. Manturov.

In May 2006 Russia’s Antimonopoly Ministry sanctioned Oboronprom United Industrial Corp. to buy out 100 percent in Kamov Holding from AFK Sistema. The deal, whereby AFK Sistema sells 100 percent in Kamov Holding to Oboronprom for $11.8 million was clinched in November 2005. In July 2007 Russia’s consolidation of its helicopter manufacturing base advanced with Oboronprom acquiring 25.07 percent more interest in the Moscow Mil Helicopter Plant from Abilis. It also reportedly holds major interests in Ulan Ude Aviation Plant (which makes the Mi-8T and Mi-17-series helicopters), Moscow Engineering Plant Vpered, and Stupinskoe Engineering PO. It also plans to become a holder of major stakes in Kazan, Kamov, and Rostvertol.

As of September 2006, the “Oboronprom” was not a shareholder of the “Rostvertol”; the state in the name of the “Rosimushchestvo” holds only 3.44% of the shares. It was known, however, that the state corporation will take control over the plant, as it is establishing a helicopter holding. Within the “Oboronprom” structure a special corporation “EW” (“Electronic Warfare”) is to be established. The new corporation will include: “Gradient” FSUE, Taganrog Research and Development Institute for Communications, Research and Development Institute for Special Information and Measuring Systems, “Pribor” and “Svyaz” state design bureau. In august General Director of the “Oboronprom” D. Manturov met with Governor of the Rostov region V. Tchuba. It is known that a cooperation agreement between the “OPK”Oboronprom” JSC and the Rostov region authorities is underway.

In August 2007 Russian President Vladimir Putin approved a presidential decree to approve switching shares in several helicopter production companies to Oboronprom United Industrial Corp. "We are currently completing preparations for the second stage of integration, which will allow us to form a united scientific-technical and production system in the helicopter production sector," Putin said.

By August 2007 Sergey Pugachev's United Industrial Corp. had found an investor to pay for the liquidation of one of Russia's largest shipbuilding companies, the Baltic Plant. Vneshtorgbank would provide the corporation with $550 million to transfer the plant's capacities to Northern Wharfs and raze the Baltic Plant to the ground in order to build elite housing and offices in its place on Vasilyevsky Island. United Industrial Corp. owns 72.23 percent of Northern Wharf and 80 percent of the Baltic Plant. Another 20.96 percent of Northern Wharf belongs to Rosimushchestvo, the federal property management agency.

Diversified conglomerate Textron Inc. said October 08, 2007 that it will purchase United Industrial Corp. (UIC) -- a totally unrelated American company with the same name as Oboronprom -- for about $1.1 billion in a move to expand its aerospace and defense business. United Industrial Corporation designs, produces, and supports aerospace and defense systems through its wholly owned subsidiary, AAI Corporation, and AAI Corporation’s direct and indirect wholly owned subsidiaries, AAI Services Corporation, Aerosonde Pty Ltd, Aerosonde North America Incorporated, ESL Defence Limited, McTurbine Inc., and Symtx, Inc.

Russian Helicopters, Oboronprom's helicopter manufacturing group, was the leading Russian designer and manufacturer of rotary-wing aircraft equipment. Oboronprom was creating an engine building holding that will be the leading Russian industrial group producing engines for aircraft and gas compression stations. Oboronitelnye Sistemy, a subsidiary of the Corporation, was the sole Russian producer of the unique Pechora-2M air defence missile system.

Several of Russia's largest engine manufacturers became part of the Oboronprom united industrial corporation, according to a decree signed by Russian president Vladimir Putin in April 2008. The Russian Federation will contribute to Oboronprom's state capital stakes in ten companies. It received 37% of the Saturn research-industrial company, 14.25% of Perm Motors, 45.03% of Aviadvigatel firm, 60% Star plant, and 14.95% of Inkar company - all of which are based in Perm. It also received stakes in several Samara based companies; 38% of Motorostroitel, 60% of the Kuznetsov Research and Technical Complex, 50% of the Samara Design Bureau of Machine-Building, 25.66% of Metallist-Samara and 38% of the Volga Aviation Technological Institute.

The Ufa-based Motor research-industrial center was transformed into a joint-stock company, and 100% of the company subsequently was transferred to Oboronprom. Also under the decree, the Engine-Building Corporation Management Company (UK ODK), a 100%-owned subsidiary of Oboronprom, was set up and held a stake of 50% plus one share in the Motor research-industrial center. UK ODK will focus on organizing serial production, modernization and maintenance of modern aviation and rocket engines, developing gas turbine engine production, attracting intellectual, industrial and financial resources for the introduction of new technologies and international standards. A total of 49% of the Kamov aircraft-building company and 3.9% of Rostvertol will also be merged into Oboronprom's stock capital.

The first talk about the liquidation of Oboronprom appeared in 2013: then it was reported that the corporation would cease to exist by 2022. According to the top manager of one of the helicopter manufacturing enterprises, it was already clear then that "it is impossible to collect the assets of the two industries indefinitely": "Now helicopter and engine building can develop without any involvement of Oboronprom, the management of Russian Helicopters and UDK already used to solve all current issues without intermediaries ".

Corporation "Oboronprom" was to be be liquidated in the second half of 2016. "Russian Helicopters" United Engine Corporation (UEC) and "Stankoprom" will go under the direct supervision "Rostec." According to a report on the federal portal of draft regulations, the elimination of "Oboronprom" would happen in the first half of the year.

This event ws not unexpected. The head of "Rostec" Sergey Chemezov had long had the idea to abolish the "Oboronprom", though he was going to do it only in 2022, as told reporters at the MAKS-2013. In particular, he noted the very difficult financial situation in the UEC. If the DCS had focused exclusively on the implementation of projects in the field of military aviation and abandoned ambitions on the civilian market, it would require state support in the amount of 50 billion rubles. If the DCS has focused on "a maximum portfolio" on the military and civil markets, then it would take no less than 180 billion rubles of state support.

By 2016 there was no money for these projects. The explanatory note to the draft resolution of the Government of the Russian Federation "On Amending the RF State Program" Development of the aviation industry in the years 2013-2025, "noted that the budgetary allocations account for 52 billion rubles., Which was less than required for the state alone UEC. Of these, 52 billion for the implementation of the subprogram "Aircraft" allocated more than 26 billion rubles., Subprogram "Helicopter" - more than 4 billion rubles., Subprogram "aviation engine" - about 8 billion rubles. Apparently insurmountable financial difficulties and have become a major cause of premature liquidation "Oboronprom".




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