Fighter Jet Maker to Go Public in London, THE MOSCOW TIMES

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The Moscow Times

May 16, 2003 Friday

EMEDIA-ACC-NO: 200305168318.m18

Fighter Jet Maker to Go Public in London, THE MOSCOW TIMES

Armed with the defense industry’s first ever stamp of approval from an
international auditor, Sukhoi jet maker Irkut said Thursday it will
head to
the London market next year with a $100 million initial public
offering.

The company, previously known as Irkutsk Aviation Production
Association, or
IAPO, also plans to raise up to $100 million with a eurobond issue in
the
second half of 2004, vice president Sergei Tsivilyov told reporters.

“The eurobond issue volume will be $50 million to $100 million as we
want to
create a credit history,” Tsivilyov was quoted by Reuters as saying.

“We will make a final decision on the volume after elections, because
we
expect Russia’s rating to be upgraded.”

The country’s credit rating is now just below investment grade, a
long-sought symbol of investor confidence that most analysts expect
ratings
agencies to bestow only after presidential election next March.

Tsivilyov said Irkut was holding a tender among four Russian banks for
a
lead manager.

“The choice of the Western bank will to some extent depend on the
choice of
the Russian bank,” he said.

Tsivilyov said preparations for a bond issue and for the IPO, which is
to
take place on the London Stock Exchange, were proceeding
simultaneously, but
the IPO could be earlier.

“There is sense in raising $100 million through an IPO, which makes up
to 20
percent of the corporation’s shares,” he said.

Irkut’s trademark plane is the Su-30 fighter, Russia’s main arms
export,
though Irkut is one of the few aviation firms not under the umbrella of
the
government’s Sukhoi holding company and positions itself as a separate
holding structure.

Sukhoi does, however, hold a 14.8 percent stake in Irkut and has
licensed
the firm to make Su-27/30 fighters for the Indian air force under a
$1.8
billion dollar contract signed in 1996.

The company delivered 10 of the supersonic jets last year, of the total
32
ordered.

In 2000, India paid $3 billion for the right to produce 140 Su-30MKI
fighters under license.

The Su-30MKI is widely considered the best fighter Russia has ever
produced,
often compared to the U.S. Air Force’s Super Hornet.

PricewaterhouseCoopers audited Irkut’s financial records to U.S.
generally
accepted accounting standards for 2000 and 2001.

Those audit reports show that Irkut’s 2001 revenue rose to $308 million
from
$244 million in 2000. Net profit in 2001 was $9 million.

According to unaudited results for 2002, Irkut’s revenue was $540
million,
while net profit was 344 million rubles ($11.1 million).

IAPO was the first defense company to issue ruble bonds, raising the
ruble
equivalent of $20 million in its first foray into the debt market last
year.

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