A-V ‘Negotiating’ With Suppliers
When the Sibur/Amtel-Vredestein (A-V) merger ground to a halt at the end of September, A-V’s lack of working capital meant it was forced to suspend production at its Kirov and Voronezh Russian manufacturing facilities. According to the most recent update, released just under a month later on 24 October, production has been suspended ever since. However, the latest reports are suggesting the company is exploring a number of creative solutions to A-V’s increasingly costly production stalemate. Meanwhile production has continued at normal levels at the un-affected Dutch part of the company, Vredestein Banden BV.
In an effort to kick start production at its Kirov and Voronezh production plants (which produce nearly 9 million tyres a year) Amtel-Vredestein is negotiating a raw material for finished product barter agreement. These plans are said to be in addition to the obvious way of reducing the high levels of debt under which the Russian part of the group continues to operate -selling the company’s assets, divisions or the group as a whole.
“We discussed with Amtel deliveries of raw material in exchange for tyres, but the scheme is sold under condition of repayment of a duty,” Sibur-Russian Tyres director (S-RT), Igor Karavaev told Kommersant. S-RT has submitted a claim for Amtel-Vredestein to pay 471 million roubles to the Moscow arbitration court.
Russian market analysts, Michael Frolov, suggested the scheme will not appeal to A-V’s other suppliers, which neither have their own interest in the company or in the direct sale of tyres.
Doubts about restructuring success
On 31 October Amtel-Vredestein published further details on the progress of the company’s post-failed-merger restructuring policy. According to the statement A-V has now received payment acceleration requests from several of its lending banks and is in continuing discussions to explore “value realisation options.”
However, there are also said to be “serious doubts…about the likely success of the ongoing restructuring exercises conducted by the company.” As long as these doubts are not resolved, “it is unclear whether the annual accounts 2007 can be drawn up on a ‘going concern’ basis,” the statement added forebodingly.
As a result Amtel-Vredestein missed its extended deadline for publishing its fiscal year to 31 December 2007 financial statements, which the company itself extended to 31 October 2008. Therefore the company applied for an exemption from the Dutch Ministry of Economics from the obligation to draw up, present and adopt the company’s audited financial statements for the year ended 31 December 2007. This exemption request only concerns the financial statements of Amtel-Vredestein N.V., the statement concluded, highlighting the fact that Vredestein Banden B.V. has separate financing arrangements in place.