The auction has sold 54 buildings of Moskvich with the total area of 750,000 sq. meters on the car plant’s old premises of 30 hectares and the new territory of 60 hectares.
Photo: Yevgeny Zapiskin
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Auction for Moskvich Car Manufacturer May End in Court
The Metropol asset management company has won an auction to buy Moskvich, Russia’s oldest car manufacturer, paying $212 million for 54 buildings and facilities. The development company Mirax Group which has been barred from bidding is set to challenge the auction’s results and suspects Metropol of collusion with the Moscow government. Mirax claims that the winner may soon hand over part of the property to city authorities to expand production at the Avtoframos car plant which is situated on Moskvich’s territory.
The bidding was set by Moskvich’s official receiver Alexander Ivanov, presenting 54 buildings of Moskvich with the total area of 750,000 sq. meters on the car plant’s old premises of 30 hectares and the new one of 60 hectares. The starting price was 5 billion 506 million rubles, and the first increment was 2 million rubles. Only two companies, Metropol and Prometei, were bidding. Metropol has won with the bid of 5 billion 554 million. Metropol’s director general Mikhail Slipenchuk says that the purchase was financed by a unit investment fund which was set up this fall. Metropol plans to build 1 million sq. meters of flat and office blocks on the plant’s old premises. The new site will be used to “develop car industry by attracting French companies”. Slipenchuk declined to give further comments.
The auction was held without major bidders including city authorities and the Mirax Group corporation. Moscow officials hoped to increase the production capacity of the Avtoframos car producer with the help of a new site. The city hall owns 6.59 percent in Avtoframos, the remaining 93.41 percent belongs to Renault. Moscow’s industry department reported in June that the output of Renault’s Logan’s can be doubled to 120,000 cars. Officials at Renault-Nissan earlier said they were eyeing the site of Moskvich as a place to expand production of Avtoframos. However, Moscow authorities quit the auction on the last day of application. An official in the Moscow government explained that Moscow was interested “only in the Moskvich culture center and part of production facilities to expand the capacity of Avtoframos.” However, the property was put up for sale as one lot, and the government has decided to call it quits.
Metropol Group was set up in 2002. It unites the asset management company of the same name, Obibank, the Russkiye Akkumulyatory company, Metropol Development, MVS-Leasing and the Metropol Express tourism agencies chain. The group’s subsidiaries own rights for complex ore deposits in Russia’s internal republic of Buryatia. The total volume of operations with its stocks at the RTS classic market exceeded $10.5 billion in 2005.
Mirax Group was barred from bidding, Maxim Temnikov, the company’s chair of the BOD, insists. “Our representatives and notary were not allowed to see to the official receiver, Alexander Ivanov, on the last day of applying,” he says. “Therefore we did not sign an agreement about a deposit, and we were unable to bid.” Temnikov thinks it is possible that the city administration quit the bidding if it secured Metropol’s promise to allocate extra premises for Avtoframos. A source in the Moscow government did not rule out this speculation. Avtoframos would not comment yesterday. Mirax Group has already appealed to the Moscow Court of Arbitration, asking to invalidate the auction’s result.
Both Alexander Ivanov, Moskvich’s official receiver, and Mikhail Slipenchuk from Metropol dismiss claims of the losing party. “Mirax was trying to catch that last train. They were too late with the application,” Slipenchuk says. Ivanov says that “filing an application to bid in an auction at the eleventh hour and then not paying the deposit is typical of raiders because they will have a legal opportunity to suit to contest the auction.”
Mirax was barred from bidding under a well-worked-out method, lawyer Alexey Filippov says. Filippov took part in auction result disputes, and he is sure that Mirax will be successful at court. “The fact that the auction was held with violations is almost impossible to prove,” Filippov says. “Claimants rarely succeed in proving that their documents have not been turned down willfully,” the lawyer explains. A top manage of a major development company says Metropol will reap more than $500 million after selling 1 million sq. meters as the largest part of Moskvich will be handed over to Avtoframos. The manager reminded Kommersant that it was the second time over the last seven days that Mirax has run into the administrative wall. Moscow Mayor Yury Luzhkov lashed out at the corporation’s development project for the Luzhnetskaya embankment, calling the scale of construction in the area unacceptable. Maxim Temnikov, however, is convinced that “this is just a coincidence.”
Anton Pavlov, Olga Pleshanova and Dmitry Belikov
All the Article in Russian as of Dec. 05, 2006
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