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. Last Updated: 07/27/2016

Ball Bearing Giant on the Roll

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Even before they have finalized the acquisition of the Moscow Ball Bearing Plant, its new owners are cherishing plans to create a national ball bearing holding company.

"We aim to merge several plants within the European Ball Bearing Corp.," Artyom Zuyev, deputy board chairman of Volzhsky Ball Bearing Plant, said Thursday.

The corporation will include ball bearing plants in Volgograd, Moscow and Samara, whose managers have signed letters of intent to join the holding.

Talks with another unnamed local company and one foreign producer outside the Commonwealth of Independent States are under way, Zuyev said.

The idea underpinning the creation of the holding is to raise returns on exports and pursue uniform sales policies at home, where ball bearing companies last year sold goods worth $190 million.

"Due to dumping by local producers, export prices for Russian ball bearings halved in the last decade," Zuyev said.

In Moscow, the founders of the national holding company are still bickering with former managers of the local ball bearing plant.

"They had no right to hold a shareholders meeting," said Vladimir Komarov, the former director of the Moscow plant, who lost his job Nov. 9.

Komarov had wanted to hand over 50 percent plus one share of the company to the Moscow city government in exchange for tax arrears, but the Moscow Securities Commission refused in the summer to register a share emission that would have diluted other stakes.

After that, a group of Volgograd businessmen led by Oleg Savchenko, who is thought to be close to Siberian Aluminum head Oleg Deripaska, went on a buying spree.

Workers at the Moscow plant, who earn an average salary of 3,500 rubles ($125) a month, owned 93 percent of the plant, but they were eager to sell their shares — seeing their price go up from 400 rubles to 1,500 rubles within weeks.

It took 1 1/2 months for the Volgograd businessmen to build up a stake close to 50 percent, paying an average of 1,200 rubles per share.

Given that the company has a total of 165,000 shares outstanding, the new owners must have paid a total of $3.5 million to get hold of the company, which last year had annual sales of 889 million rubles.

Seeing his influence on his company slipping away and unable to prevent the shareholder meeting, Komarov obtained a court injunction that declared the gathering illegal.

But Zuyev and his colleagues said that Komarov failed to meet the necessary legal requirements. In order to exercise a controlling stake at the Nov. 9 shareholders meeting, they made an alliance with automaker ZIL, which owns a 7 percent stake in the plant.

In the absence of shareholders holding 46 percent of the plant's shares, the meeting appointed Nikolai Pleshakov as new director. He stormed the building with a small army of private guards, kicking Komarov out of his office.

Both parties have called on lawyers to resolve the dispute, so numerous court hearings are due.

Meanwhile, Zuyev and Pleshakov cut a deal with Moscow Mayor Yury Luzhkov, promising him a blocking stake of 25 percent plus one share in the company if he lets them run the plant.

"City Hall had tried to take a controlling stake in the company and appoint its managers," said Zuyev. "But such tactics did not pay off, so they are eager to see if private businessmen can do the job better than city bureaucrats."