Voltyre-Prom: Key shareholder announces aim to sell stake in tyre maker

The Russian Direct Investment Fund (RDIF) has informed Titan International of its wish to relinquish its shareholding in agricultural and industrial tyre manufacturer Voltyre-Prom. The Kremlin-backed sovereign wealth fund, which acquired the tyre maker together with Titan and private equity firm One Equity Partner in 2013, shared its intention via its exercise on 14 November of the settlement put option included within the Voltyre-Prom Shareholders’ Agreement.

The three parties own all equity interests in the Russian off-road tyre specialist, which operates a 185,000 square metre production facility in Volgograd. According to RDIF, Voltyre-Prom holds a 40 per cent share of the Russian market in the segments where it is active, and exports have increased by 60 per cent over the past three years.

Titan International states that it may acquire RDIF’s share with cash or Titan common stock. Depending on the final settlement date, it would cost Titan either US$74.3 million to $76.2 million or 10.172 million to 10.436 million Titan common stock shares to acquire RDIF’s stake in Voltyre-Prom. If paid in stock, Titan may also be obligated to pay cash to RDIF to cover any ‘shortfall’.

One Equity Partners hasn’t yet stated an intention to exercise its put rights, however it may do so through 9 January 2019.

“Titan’s Board of Directors, together with its financial advisors, is working towards adopting a course of action with respect to the put option exercise that will be in the best interests of our shareholders,” stated Paul Reitz, president and chief executive officer of Titan International. “It’s important to note that an affiliate of RDIF is on the US Treasury’s Sectoral Sanctions List and, as a result, together with other regulatory approvals that may be required to be obtained in order to effect the settlement of the put option, approval from the Office of Foreign Assets Control (OFAC) may also be required.

“The closing of the put option is required to occur within 60 days of the notice of the put, or when all necessary regulatory approvals are obtained, if later,” Reitz continues. “Under the Shareholders’ Agreement, if necessary regulatory approvals are not obtained as provided in the Shareholders’ Agreement, then Titan’s obligation to purchase the interest in Voltyre-Prom from RDIF would cease. There can be no assurance at this time as to the ultimate outcome of the exercise of the put option pursuant to the Shareholders’ Agreement and its effect on Titan.

“Our team at Voltyre-Prom has worked hard over the past few years to transform this plant and strengthen our capabilities. We continue to believe in the strength of the Voltyre-Prom management team and the prospects of a successful future,” the president and CEO concluded.