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Ailing bicycle plant pins revival hopes on takeover by Austrian investor

Motavela staff hope that the Minsk-based bicycle and motorcycle maker's acquisition by Austria's ATEC Holding GmbH will improve its financial position, Mikalay Kobelew, chairman of Motavela's supervisory board, said in an interview with BelaPAN.

The Austrian company is to pay 15.6 billion rubels for a 99.7-percent stake in the company in five equal installments of some 3.1 billion rubels each between January 1, 2008 and 2011.

Alyaksandr Lukashenka on July 26 signed a presidential edict outlining terms of the deal.

Under the document, ATEC Holding GmbH will pay the debts that the company owes to the Belarusian government and the Minsk City Executive Committee and invest no less than $20 million in its revival in a period between 2008 and 2012.

The Austrian company also must not change the plant's major line of business and its trademark.

If it fails to fulfill the obligations it will have to pay into the state budget a difference between the stake's nominal and market values.

"The company that is investing in our enterprise counts on something. If they improve our difficult position, we will be happy," Mr. Kobelew said.

The executive noted that the supervisory board regarded the performance of the company's management as "unsatisfactory."

"We will understand everything as soon as an investment agreement is signed," Mr. Kobelew said. "We have a situation now where we have large arrears and scant working assets that are just enough to pay wages."

Put into operation in 1945, the Minsk Bicycle and Motorcycle Plant was transformed into a stock corporation named AAT Motavela in 1999, with the entire stake sold to the staff.

The company started experiencing severe financial difficulties several years ago as Chinese rivals gained strength in Asian markets where the plant exported its products to.

In November 2005, more than 300 employees blocked a major avenue in Minsk for several hours, demanding that the management pay them back wages. Following the protest, Alyaksandr Lukashenka directed that the Minsk City Executive Committee take over the management of the unprofitable company. The government regained control of Motavela, which received large loans and was granted tax exemptions and delays in paying outstanding bills.

ATEC Holding GmbH owns a stake in the Yalizava glass plant in the Mahilyow region. This past April, the management of the company expressed intention to invest in the construction of a soda ash plant near Mazyr.