Ukrainian Motor Sich to Sell 50% Stake to Turkish Firm

Ukrainian jet engine maker Motor Sich wants to sell half of its stakes to a Turkish company.

Motor Sich’s engines power Antonov planes, besides “Mi” and “Ka” series of military helicopters used by nearly fifteen countries.

The sale of some 50% stake in the Ukrainian firm to a Turkish company with a state share in the capital was discussed by President Volodymyr Zelenskiy and Turkish leader Recep Tayyip Erdogan on Saturday, Chas News reported citing sources in the Ukrainian government.

Zelenskiy paid an official visit to Turkey last week for the ninth meeting of the Turkey-Ukraine High Level Strategic Cooperation Council.

Motor Sich was already on the list of partners for the production of engines for Turkish drones, particularly the Baykar-produced Bayraktar TB2 combat drones. Ukraine has already purchased some of these drones for its military, and has shown interest in buying dozens more, opening possibilities for joint production of the aircraft.

Turkey’s ATAK 2 gunship will use an engine purchased from Ukraine as well, manufacturing company Turkish Aerospace Industries (TAI) said in March during a live broadcast.

China has its eyes set on Motor Sich since a decade. By early 2015, Motor Sich and China’s Skyrizon signed an agreement which included some technology transfers from Ukraine to China. In return, Motor Sich received a $100 million loan over 10 years from state-owned China Development Bank. Terms covered included Chinese government’s takeover of the Motor Sich if at all Skyrizon went bankrupt, according to the Centre for European Policy Analysis (CEPA).

In 2016, Vyacheslav Boguslayev, chairman of the board of directors and honorary president of Motor Sich, signed another agreement selling a controlling stake in the company to the Chinese.

“As a result, Beijing Xinwei Technology Group Co. Ltd — represented by a subsidiary of Skyrizon Aircraft and other offshore companies and controlled by Chinese tycoon Wang Jing — became the new co-owners of Motor Sich. According to various sources, Jing controls between 56-76% of the company’s shares,” CEPA said.

Skyrizon’s majority shares were frozen in 2017 pending an investigation by Ukraine’s security service (SBU). On April 2018, the company shares were seized at the request of the SBU investigator in order to preserve the physical evidence.

The Chinese side brought a $3.6 billion arbitration case against Ukraine for blocking the shares.

Ukrainian state-owned defense conglomerate Ukroboronprom confirmed the sale of more than 50% of Motor Sich’s shares to the Chinese in December 2019. The deal will reportedly involve a package of shares worth around $250 million, the amount that China will “invest” in the factory over the next two years.

Skyrizon, which had tried to force a Motor Sich shareholders meeting in January, was hit with sanctions by both Ukraine and the U.S. Commerce Department.