Oboronprom to Buy Shares In Saturn at Market Prices

Prime Minister Vladimir Putin said state-owned defense firm Oboronprom would buy shares in Saturn at market prices in a move that would effectively cede control over the jet-engine maker to the state, Interfax reported.

"In addition, the company's debt will be refinanced with a loan from VTB for 10 billion rubles," Putin said Tuesday, adding that other resources might be mustered to help the troubled company.

The unavailability of loans has made it increasingly difficult for Saturn to pay wages and continue producing engines for the Superjet, which it is developing in cooperation with Sukhoi.

VEB, charged with helping companies refinance their foreign debt, agreed to help on the condition that the engine maker, which is majority owned by its management, sell a 13 percent stake to state defense firm Oboronprom, effectively ceding control of the company to the state, an official familiar with the nature of the talks said last month.

"Today, Saturn is experiencing problems. I think that the leadership of the firm has taken part in some unjustifiably risky financial decisions and as a result has not been able to both operate and pay down its debt in the conditions of instability on the financial markets," Putin said Tuesday.

Saturn's CEO, Yury Lastochkin, took Putin on a tour Tuesday of the firm's factory, based in Rybinsk, in the Yaroslavl region.

Although the prime minister was otherwise in a generous mood while at the factory, he found the production line less than satisfactory, complaining that only 5 percent of the materials used in the manufacturing of the engines were made in Russia.

"What's with these parts?" Putin asked.

Lastochkin said that using Russian-made materials in engines could require up to 24 times as much labor as using foreign-made parts.

Putin answered that the process could be sped up with the use of nanotechnology made on the premises.