Vredestein unit for sale as Amtel's Russian operations run out of money

ERJ staff report (DS)

Enschede, Netherlands -- The parent of the Russian tyre maker, OJSC Amtel-Vredestein said the Russian unit has run out of money and cannot repay its creditors. The holding company, Amtel Vredestein N.V. based in the Netherands has said it will not provide any more funds to the Russian unit. Although the company did not discuss the future of the Russian operations, it seems unlikely that they can continue when the company is unable to pay for supplies of raw materials or energy.

The troubles of the Amtel Vredestein Group do not end there. While the parent group says it will not provide further funds to the Russian unit, it has, in the past made certain guarantees on behalf of the Russian unit. In a statement to the London Stock Exchange, Amtel-Vredestein said the development, "may have consequences for the going-concern status of AVNV given a number of guarantees provided by AVNV in favour of the creditors of OJSC AV. " This appears to suggest that Amtel-Vredestein NV will become insolvent if the creditors call in those guarantees.

On the positive side, Amtel Vredestein's Dutch operation, Vredestein Banden B.V. has ring-fenced financial arrangements and continues as a going concern. A-V has started the process of selling the Vredestein unit, with several potential buyers having submitted initial bids and conducting due diligence processes.

Amtel-Vredestein noted, "there can be no certainty that the sale of VBBV will be successfully concluded." The company also announced that the managers of Vredestein, Rob Oudshoorn, Kees Hettema and Mark Luyten, have resigned from the A-V board, due to potential conflicts of interest.

Oudshoorn has said in the past that he is ready to effect a management buyout in conjunction with Dutch private equity.

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London Stock Exchange announcment from Amtel-Vredestein