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Sovetnik Pravitelstva CWA, Tovarichestvo Palmsa, Inc.
Investment Bankers. Washington, United States of America.
"Names locations, descriptions of 200 Russian defense industries eligible for investment capital for conversion to non-military products production" (400kb)
TABLE OF CONTENTS
CHAPTER 1: DIRECTORY OF RUSSIAN ENTERPRISES
CHAPTER 2: INVESTING IN RUSSIAN DEFENSE CONVERSION: OBSTACLES
CHAPTER 3: U.S. AND RUSSIAN EXPORT CONTROLS
CHAPTER 4: RECENT BILATERAL AGREEMENTS
CHAPTER 6: RUSSIAN FEDERATION LAW ON CONVERSION
CHAPTER 7: RUSSIAN GOVERNMENT AUTHORITIES - DEFENSE CONVERSION
PALMS & COMPANY, INC., INVESTMENT BANKERS
United States Interbank Ruble Currency Exchange 6421 Lake Washington Boluevard Northeast, Kirkland Washington 98033-6876, Tel: 1-425-827-5528 & 1-425-828-6774 Email ("Internet") palms@PeterPalms.com
The United States Government is committed to encouraging private investment in the conversion of Russian defense industries, by increasing the awareness of American industries of opportunities for investment in Russian defense industries. Palms & Company supports that policy.
In early 1994, the governments of the United states and Russia declared their intention to make cooperation in defense conversion a high priority. Both countries recognize that conversion of defense industries is necessary to create a more economical ly rich world. The two nations agreed to support the exchange of information about defense industry enterprises, which are participating in conversion to consumer goods production. Palms & Company is ready to work as financial advisor to Russian defense industries to help them find capital and strong operating companies in the United States for accomplishing this conversion.
In June 1992 The United States and the Russian Federation issued a joint declaration recognizing the priority both countries place on advancing defense conversion as a means to ensure the economic interests of their peoples. In recognition of this priority, the two countries established the U.S. - Russia Defense Conversion Sub Committee of the U.S./ Russia Business Development Committee. Secretary of Commerce Ronald H. Brown and Deputy Prime Minister Alexander Shokin serve as Co-Chairs of the U. S./ Russia Business Development Committee. The Under Secretary of Commerce for Export Administration and Ivan S. Materov, Deputy Minister, Russian Ministry of Economics, serve as co-chairs of the U.S./Russia Defense Conversion Subcommittee, a subordinate group focusing on issues relating to defense conversion.
In 1993, President Clinton designated Secretary of Defense William Perry as the Administration's point for contact for defense conversion activities in Russia. Mr. Perry chairs the U.S./ Russia Commission on Defense Diversification and the Under-Secretary of Commerce for Export Administration serves as the Vice Chair. Commerce's U.S./ Russia Defense Conversion Subcommittee serves as a bridge from the Commission on Defense Diversification to the BDC.
The intergovernmental Subcommittee recognizes the important role of the private sector and the practical needs for the business community to participate in the complex task of defense conversion. Palms & Co. can introduce Russian defense companies to Western industries that wish to expand trade and investment and participate in the removal of obstacles in both countries to expanded trade and investment.
Palms & Co. has profiles of 200 Russian defense enterprises who are eligible for DNA co-investment grants and who can hire Palms & Co. to provide investment banking services and matchmaking services. There are 50,000 American enterprises which could possibly be suitable partners for Russian defense companies. Palms & Company suggests that Russian defense companies sub-lease a representation office at the offices of Palms & Co.in the U.S. This office will act as their representative to search among these 50,000 American companies for a suitable partner and assist the Russian companies in negotiations with these American companies. Most of these American companies do not know about this investment opportunity or the DNY program. Unless Palms & Co. tells the American company about your company you may miss the opportunity to do business with them.
The Congress of the United States has authorized in the national budget approximately $400 million dollars for investment in the Conversion of Russian Defense Industries. The program is referred to as the Nunn-Lugar Act. Palms & Company can assist Russian Companies to locate American companies who will jointly make application for capital credits in connection with their joint conversion projects. In addition to this financing the following organizations exist who have capital for investment in Russia.
The original capital of EBRD was $20 billion dollars. The total capital available from all of these sources combined is much higher. It can be said that there is more money available than is being asked for because few Russian companies have taken the proper steps to qualify for and ask for this capital.
We will sell to Russian companies our time and knowledge and expertise to show you how to prepare business plans, pre-investment analysis, feasibility study, forecasts of financial operations, marketing studies, financial statements, and negotiate terms and conditions of capital and financing, technical assistance, 'know'how', marketing and management. We will help you to prepare Investment contracts and negotiate a transaction. Dr. Pyotr Johannevich van de Waal-Palms, Dr of Economics and advisor to U.S. and Russian Government, is President of Palms & Company, Investment Bankers, established in 1934 and the 14th largest investment banker in the United States in 1985 in terms of new capital invested in new businesses. He was an invited delegate to, and attended the Yeltsin-Clinton Summit and various government meetings such as with Deputy Prime Minister Anatoliy Borisovich Chubais at the New York Stock Exchange. He is also President of Russian Venture Capital Fund of America, which has been instrumental in the investment of more than $100 million in Russia.
He is also President of The United States Interbank Ruble Currency Exchange (Mesjbankkovkaya Valuutnaya Birshje), which maintains a market in the ruble on world markets at free market prices. Palms & Company has been licensed by the Ministry of Foreign Economic Relations of Russia since 1989. Dr. Palms is an expert on Russian business practices, laws and regulations and financing and teaches business at Russian Academy of Science, Vladivostok, Moscow Business School and Leningrad Management School. His articles about business, privatization, defense conversion , unemployment inflation, monetary policy, devaluation, and fiscal policy are widely published in Russian newspapers. Dr. Palms has 40 years international experience as financial and marketing advisor to international businesses operating in market economies and to businesses in countries transitioning to market economies, such as Russia. For the past five years he has worked exclusively for Russian companies.
The White House, Secretary of Energy, U.S.
Small Business Administration, U.S. Department of Commerce, United States Minority Business Development Agency,U.S. Office of Economic Development, U.S. Community Services Administration, Russian Academy of Science, President Yeltsin's Council of Economic Advisors
The firm is listed in the following directories and books which are available at most Western public libraries:
We sometimes co-invest in Russian companies which have lead co-investor participation from one of the firms listed earlier. The combined assets of these organizations exceed $20 billion dollars.
Cost of our Work: Expenses: You pay for use of office rent, telephones, fax machines, computers, financial advisor, office supplies, copy machines, utilities, interpreters, translators, travel, printing, postage, writing, automobile use, long distance charges, etc., including all expenses of the the work. The amount you pay is a rate of $250 per hour for the time devoted by Dr. Palms to your project. In this amount is included also all of the staff and subordinates and their combined overhead expenses.
The average time needed for financing a project ranges from 1000 to 2000 hours. This is paid at the beginning of our work.
Compensation: At the completion of our work we receive a commission of 10% of the capital which has been invested in your company. From this amount is deducted the expenses that have been previously paid.
Terms: Guarantees do not exist and are not available.
The Russian company cannot guarantee that the Russian government will permit the terms and conditions negotiated between the parties. Neither party knows in advance what decisions each will make and what proposals each will make and whether they will be acceptable to both parties
We and the Russian company both do our best possible work. We do not offer any work on the basis of giving credits to the Russian company for the expenses of expenses and receiving repayment of such loans in the future from profits made from invested capital. We will consider to accept payment in rubles or in exports of fur skins of sable or mink of fox. All business has some risk.
Further information and answers to questions are available to interested parties. Our work is best suited, and most useful for Russian companies who want at least $10 million in capital investment. We will provide visas to companies who wish to visit us in Seattle to discuss business possibilities.
The Western companies are privately owned enterprises who will participate in technology transfer, management, export operations and cooperative business relations with the Russian defense plants. The U.S. government will support the cooperation of these private Western companies and provide financial assistance, but will not itself participate in the management and operation of the Russian enterprises.
It is not a good idea for Russian companies to rely on the DNA, or the western operating companies selected by DNA, to represent the best interests of the Russian company. In fact, it must be expected that Western companies will represent their own best commercial interests and that it would be a conflict of interest for them to also represent the Russian company. When Russian companies depend on DNA to find a Western partner it may not result in the development of the technology which the Russian company considers most interesting. In one case a famous Russian space electronics company received an American partner for producing cola drinks. This was embarrassing to them If Russian companies want to find American partners with interests for technology development which are the same as those of the Russian enterprises, they must use their own representatives to find American partners and to develop contracts for investment and cooperation with these Western Enterprises. For this they can make use of American Investment bankers, financial advisors, and experienced negotiators who can represent their interests. Palms & Company, Inc. has been such an investment banker, since 1934. Russian companies will qualify for this program only if their enterprise is privatized or converted to a corporation. They must also have plans to permanently reduce their production of military systems. They cannot use the capital to survive until demand for military products increases again in the future. They must intend to re-orient production from defense to civilian production. The venture must be able to compete in the world markets and be able to earn profits from the use of the capital.
Palms & Company is ready to provide ideas and strategy for accomplishing these requirements and to develop export markets for new products. Palms & Co invites Russian industry to consider establishing Palms & Co as its American Investment banker in representative and advisory capacity and to utilize the offices of Palms & Co in the United States as it branch and representation office.
Becoming familiar with U.S. industry which can participate in conversion of Russian factories to non-defense production, is a task in which Palms & Co. offers its 30 years of experience to Russian companies. There are many words in Western market economies which do not have a counter-part in Russian. Even when speaking the same language both parties may intend different things when saying the same words. It is the job of Palms & Co. to create understanding between the parties so that there will be satisfaction. We understand very well how to accomplish such results.
Because American companies will receive half of their capital for investment in Russian companies free from the U.S. Government, there is a very high possibility that American companies will become interested in Russian proposals present by Palms & Company, Inc.
Russian companies underestimate the important of having a Western representative to negotiate on their behalf with Western companies. Our experience shows that Russian companies will get much better results if they have a Western representative as their advisor and negotiator. Palms & Co. can help the Russian enterprises, listed in this directory, identify suitable Western venture partners. We welcome receiving business plans which provide the information typically required in the West. We will recommend a preliminary strategy when this information has been studied. Our offices in Moscow, St. Petersburg, Volgograd (Milan,Italy branch), Novosibirsk, and Vladivostok can help in this process. Once we have agreed about our representation, we can start to arrange serious business discussions with Western firms. We know what information Western firms want and what questions they will ask and we can give the right answers for the Russian companies we represent.
The intergovernmental Subcommittee recognizes the important role of the private sector and of the practical need for the business community to participate in the complex task of defense conversion. The Subcommittee will seek to facilitate the exchange of information and the promotion of trade and investment, by the development of contacts between interested groups, the expansion of information exchange on enterprises undergoing conversion and the improvement of the environment for commercial activities through the identification and removal of obstacles in both countries to expanded trade and investment.
To better acquaint Russian Defense Industries with the opportunities for business with American companies less well known cities than Moscow and St. Petersburg will be included in the next edition of this directory Each subsequent installment of the Directory will highlight a particular Russian city.
It will provide information on the political climate for business development, technology for which the region is known, and the economic, business and social infrastructure that may be unique to that area. The installment will also highlight profiles of enterprises in that city. The third installment of the Directory will focus on Nizhniy Novgorod.
Nizhniy Novgorod is one of the most promising locations outside the cities of Moscow and St. Petersburg for success in implementing economic and business reforms in Russia. The oblast's leadership, notably its 33-year-old governor Boris Nemtsov, heads the list of several key ingredients, including the city's history as a pre-revolutionary commercial center, that contribute to the unique political culture of the city and oblast. In his efforts to combine economic reforms with elements of a Western-style grassroots democracy, Nemtsov has established a consensus-building approach to decision making in the oblast that has minimized political squabbling and local governmental paralysis. In addition, Oblast Governor Nemtsov has acted as Nizhniy Novgorod's chief publicist and marketing manager, promoting the manufacturing and technological skills of local defense industries to foreign investors.
Until September 1991, Nizhniy Novgorod-then known as Gorkiy-was a closed city because of its role in producing some of the former Soviet Union's most advanced weaponry. Factories there have produced military aircraft and aircraft components, artillery and missile equipment for the ground forces, Sierra and Kilo class submarines, military radars and communications equipment. The city also contains several scientific institutes engaged in research and development in advanced technologies for the military. Other industries represented in Nizhniy Novgorod include agriculture, automotive, construction, electrical equipment, oil refining, and plastics. The city's automotive plants produce 34 percent of the trucks and 26 percent of the passenger buses in Russia. Several plants contribute to the construction industry, and a number of plants are dedicated to the manufacture of textiles and food products.
The early, solid start made by the oblast government in privatizing and introducing market elements into the local economy has quickly brought Nizhniy Novgorod into the national and international limelight. In the spring of 1992, foreign investors and consultants began arriving in significant numbers. In May 1992, former Gorbachev economic adviser Grigoriy Yavlinskiy moved his think tank "Epitsentr" to the region and himself spent 100 days there formulating a systematic plan for the region's privatization program. Nizhniy Novgorod's leaders have stated that the goal of their reforms is to create, via private ownership, a local middle class of entrepreneurs motivated by the potential for personal gain as well as by the idea that they have something to lose. The oblast has sold off hundreds of small businesses in the trade and service sector and begun privatizing its transportation industry by auctioning trucks. It has also made progress in land reform, showing a substantial growth rate in private farming. In support of the new private farmers, the oblast set up Russia's first land bank and made it legal to use privately owned land as collateral for loans.
Nizhniy Novgorod's leaders have shown the same businesslike approach and ingenuity in facilitating defense conversion as in dealing with the other issues confronting the region. They have created a Conversion Bank with funds generated by persuading Moscow to allow the oblast to retain half of the taxes paid by local industries. The bank will finance local defense industry's most promising civilian projects. The oblast is also experimenting with contracting out for some of the social service responsibilities of defense plants to regional municipal authorities.
The city's favorable position at the juncture of the Volga and Oka rivers and its railroad network contribute to its development as a leading industrial center of European Russia. In 1990 the population of Nizhniy Novgorod was 1,443,00
Communications about Investment in Russian Defense Industries: Increasingly, Russian government and enterprise officials are using Internet-compatible E-Mail (via domestic networks such as Relcom and international links such as SprintNet, Sovam Teleport, etc.) to communicate quickly, reliably and conveniently. Information sent via an E-mail file requires approximately five percent the size of the corresponding fax file. E-Mail also provides greater flexibility than fax transmissions, as messages can be stored until the receiving end is operating. Moreover, E-Mail rates may be less expensive than fax rates at the point of origin.
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