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. Last Updated: 07/27/2016

Mil Avoids Bankruptcy, Creditors Irked

Moscow's famed Mil Helicopter Plant avoided bankruptcy Monday when a city arbitration court extended the term of external manager Vladimir Bogocharov by six months — angering the plant's creditors, who immediately asked the court to replace him.

While the court said that it was unhappy with the progress made by Bogocharov, who took control of Mil two months ago to steer it back to financial health, it nevertheless confirmed his right to remain in his current post.

The court also ordered Mil to pay its largest creditor, Mezhregionalny Investitsionny Bank, $2.4 million, despite Bogocharov's contention that Mil owes that bank nothing under an agreement he recently worked out with the State Investment Corp., or Gosinkor.

The court, creditors and Bogocharov himself have all put Mil's total debt at 315 million rubles ($11.25 million).

On Monday, however, Bogocharov said that Gosinkor had bought all of Mil's debts, which he said amounted to just 165.5 million rubles.

He gave no explanation for the discrepancy.

Since World War II, the Mil plant has exported thousands of helicopters to 70 countries, in deals worth over $7 billion. It has also supplied 90 percent of the Russian army's helicopters.

But while it once held a quarter of the global market, today Mil is struggling to survive.

Bogocharov said the factory's main shareholders are U.S. helicopter giant Sikorsky Aircraft Group with 9.38 percent, Rosvertol with 12.63 percent, and AKB Rosbank with 9.27 percent. The Property Ministry owns a 31-percent stake.

Gosinkor is an investment arm of the Property Ministry with authorized capital exceeding $1 billion. It was established in 1993 to increase the effectiveness of the investment process in private companies and to attract foreign investments.

In 1996, Gosinkor created a holding company comprised of over 20 firms.

Gosinkor then let Guta Bank, in which it has a controlling interest, handling most of the finances for those 20 firms.

Roman Khlyustikov, a spokesman for Gosinkor, confirmed Tuesday that Gosinkor is now the only Mil creditor, but he refused to specify the details of the debt deal.

"The aim of Gosinkor is to protect the government's interest in the plant," Khlyustikov said.

"The Property Ministry does not have resources to help the plant," Khlyustikov said. "But [Gosinkor] has the resources, as well as the experience [to help]," he said.

Khlyustikov said that Gosinkor has an ambitious program to attract $25 million in fresh capital to Mil, but in order to do that it had to consolidate the plant's debt to end the bickering with creditors.

Sergei Surov, the deputy chairman of the board of MIB, said Tuesday that his bank has sent back to Gosinkor some 33 million rubles, which is less than half of Mil's overall debt to the bank.

"Bogocharov had no right to do that [strike a debt deal with Gosinkor] without the consent of the committee of creditors," said Surov, adding that he was surprised by the move.

Surov said that Bogocharov recently took a 3-month loan from Guta Bank at 28 percent. "Bogocharov just increased Mil's debts even more," he said.