The director of the Volyn Silk Combine, Oleksandr Kropyva, reported that the additional agreement will specify conditions regulating the fulfillment of investment obligations by both the enterprise and the SPF. "Basically, this concerns the repayment of wage arrears and debts to the budget," he says.

The state holds no grudge

The Kherson Cotton Combine is one of the most powerful light industry enterprises in Ukraine, capable of producing about 200 million square meters of cotton fabric per year. By 2000, due to the loss of sales markets, the enterprise had significantly reduced production, and the State Property Fund decided to attract a private investor to the combine. The government also considered the possibility of establishing CJSC "Cotton of Ukraine" on the basis of the combine's assets and transferring the state stake to the management of the Kherson Regional State Administration.

Five attempts by the SPF to sell the enterprise in 1999-2000 failed due to the lack of bids. However, having significantly lowered the starting price on June 1, 2004, the SPF sold 51.76% of the enterprise for UAH 18.63 million to the Volyn Silk Combine.

The investor undertook to increase production volumes, preserve the profile and number of jobs, pay off the combine's overdue accounts payable - about UAH 20 million - to the state budget and the Pension Fund, and also to repay a loan of $1.556 million to Ukreximbank by June 1, 2005.

On August 8, 2005, First Vice Prime Minister Anatoliy Kinakh stated that the state was considering the possibility of annulling the purchase and sale transaction of the combine due to the new owner's failure to fulfill investment obligations regarding the restoration of profile production.

The head of the department of textile, garment, knitwear and haberdashery production of the Kherson Cotton Combine, Valentyna Vynohradova, noted that a number of objective factors prevented the investor from fulfilling its obligations. "Not only the investor is to blame. Previous lawsuits did not allow it to act freely," she emphasizes.

Oleksandr Kropyva also points out that the litigation hindering the enterprise's activity continues to this day. "In order to fulfill the investment obligations defined by the state, it must create the conditions," he notes.

Semenyuk will speed up the process

According to Yuriy Nikitin, on December 27, SPF head Valentyna Semenyuk intends to travel to Kherson to resolve all issues.

The Kherson regional branch of the State Property Fund is awaiting the arrival of the head of the central office. Although the deputy head of the local branch, Tamara Dyachenko, notes that "the privatization of this facility went through the central apparatus and its further fate will also be decided by central government officials." "We were only instructed to sort out the property that was not included in the charter fund of the Kherson Cotton Combine," Dyachenko explained.

In turn, Yuriy Nikitin points out that Valentyna Semenyuk's intervention is also necessary because there is no consensus among government bodies regarding the combine. "The Ministry of Industrial Policy supports the owner regarding restructuring, while the Kherson Regional State Administration believes that the agreement should be terminated," he explains. Nikitin emphasized that the SPF has decided to retain a 25% stake in the combine under state ownership to enable control of the facility.

The Volyn Silk Combine is controlled by the Ukrainian-Tajik LLC "Ukrainian Cotton Company," which owns 99.9% of its shares. In turn, "Ukrainian Cotton Company" falls within the sphere of influence of one of the Tajik cotton producers and the Kyiv investment company "Astarta."

Published in the newspaper "Delo" No. 46 of December 21, 2005.