HANOVER, Germany (Oct. 8, 2004) — Continental A.G. has put its Russian tire joint venture with Moscow Tire on hold for the forseeable future due to a series of delays and problems.
The latest delay concerns a comment from Russian government officials that appears to question the future of large-scale industrial operations in residential areas, notably in Moscow. Conti and Moscow Tire signed their joint venture letter of intent in September 2002.
A spokesman for Continental said although there have been many delays in the project for a variety of reasons, each of them could have been overcome separately.
The latest pronouncement from state authorities, however, appears to contradict assurances of continued long-term production given by the local Moscow authorities. It is this contradiction that has caused Conti to freeze all further activity on the project until these questions have been resolved, the spokesman said.
As a consequence, Conti is engaged in serious discussions with its joint venture partner over the future of the operations at Moscow Tire.
The spokesman said the risk is relatively limited. The maximum risk Conti is exposed to over this project is less than $12 million, the spokesman said. This would have no significant effect on Conti´s financial figures, he said.