ARMENIA’S NAIRIT PLANT TO SIGN 150 MILLION EURO INVESTMENT AGREEMENT

ARKA
Feb 17, 2009

YEREVAN, February 17. /ARKA/. Armenia’s Nairit plant plans to sign
a $100mln-$150mln investment agreement, reported Vahan Melkonyan,
director of the plant.

"In March, we hope to sing an agreement on financial stabilization,
modernization, reconstruction and repair activities," he told reporters
on Monday.

Speaking at the roundtable on anti-crisis management, Melkonyan said
last spring the plant and a group of Western banks signed a $250mln
agreement on refinancing and reconstruction.

"With the syndicated loan being postponed to summer and everything
cracking down in the fall, the project financing was delayed," he said,
adding the banks plan to cut threefold investments in Nairit.

Lack of transparency in the plant’s relations with the government
was a major hindrance as the global financial crisis hit the markets,
according to Melkonyan.

"The plant consumes 6% of natural gas flows to Armenia, 9% of generated
electricity, as well as 100% of thermal power generated by Yerevan
TPP which is now undergoing repairs," he added.

The major difficulty while drawing up a business plan was that the
price of thermal power has not been fixed yet, Melkonyan pointed out.

"The business environment we are working in is not favorable for
large enterprises. It is mean for small and medium-scale businesses,
he concluded.

Armenia’s chemical firm Nairit plant was a chloroprene rubber producing
monopoly in the Soviet Union. In 1989, the enterprise closed down
for environmental reasons and opened partially in 1992-1993.

In 2001, Nairit plant was supplied with state-of-the-art production
line to produce chloroprene rubber and repay its debts.

In 2006, the British Rainoville Property Limited paid $40mln to become
the 90% shareholder of the plant, with the RA Government holding the
rest of the shares.

Last November, the enterprise had to lay off 1,528 workers due to
the global crisis, hoping to call them back on March 1.