Sibur and Amtel-Vredestein will own 70% of enlarged group

Two leading tyre manufacturers in Russia are combining their resources to create an enlarged group operating from seven sites and employing over 30,000 people.

In a complex deal, petrochemical company Sibur Holding will end up with a 70% controlling stake in an enlarged group comprising indebted tyre manufacturer Amtel-Vredestein and its own Sibur Russian Tyres. The new Amtel-Vredestein organisation will be one of the world’s top 10 manufacturers supplying both car and truck tyres. Importantly, it will have a stronger balance sheet and essential funding.

Under the terms of the deal, Amtel will buy Sibur’s existing tyre-making business through the issue of almost 160 million ordinary new shares to Sibur. Amtel also plans to raise $150m through a private placing of almost 80 million shares. Sibur will buy $50m of these shares and Sibur Russian Tyres will provide $40m in interim funding.

Amtel has repeatedly said it has had problems refinancing its short-term debt, caused principally by losses at its AV-TO tyre retail business and high interest expenses. It posted a net loss of $33.5m in the first half of 2007. In 2007, privately-owned Sibur Russian Tyres generated a pre-tax profit of $52m from sales of $1.08bn.

A leading European tyre producer, Amtel-Vredestein sells passenger tyres under the Vredestein, Amtel and Maloya brands. It has plants in Russia in Kirov and Voronezh, plus another in Enschede, Netherlands. Sibur Russian Tyres sells Cordiant passenger car tyres and Tyrex truck tyres. It has facilities in Yaroslavi, Omsk, Volgograd and Yekaterinburg.

The deal should be completed in the second half of the year. Vadim Gurinov of Sibur Russian Tyres is expected to be appointed chief executive. Sibur Holding is part of Gazprombank Group