UAC’s Board of Directors considered the financial deficit solution

Today at the headquarters of JSC "United Aircraft Corporation" [RTS, MICEX: UNAC], the company's Board of Directors held its meeting chaired by Sergey Ivanov, Deputy Prime Minister of the Russian Federation. Key questions on the agenda were the solution for the financial deficit, summary of UAC`s activities in 2009 and approval of production and financial plans for 2010 and beyond.

Proposals to settle the financial deficit of UAC and its subsidiaries were among the first on the meeting's agenda. In 2009, the RF Government adopted a series of decisions to support UAC and to settle the Corporation`s financial deficit. Execution of the decisions to reduce the consolidated debt level should be carried out during 2010. The overall financial deficit of the Corporation and its subsidiaries was identified at RUR 70.54 billion. Of this amount, RUR 24.26 billion is to be repaid at the expense of the federal budget funds injected to the UAC`s capital in 2010.

In accordance with the decision of the Board of Directors the remaining RUR 46.28 billion must be restructured. The government guarantees and the state subsidies for 100% of the interest payments on the restructured debt will be given to UAC. The Board of Directors approved the plan to restructure the debt by way of repayment of UAC`s obligations to the creditors with corporate bonds secured by the Russian Federation guarantees.

The bonds placement will provide comprehensive state control over the debt restructuring, as it is carried on one consolidated borrower - UAC. It will also optimize the State's expenditures and will provide UAC with fixed debt cost until 2018 at the level of the Russian Federation sovereign debt. Additionally, it will provide more opportunities for UAC's operating and investment activities.

Alexei Fedorov, the President and Chairman of the UAC`s Executive Board also reported to the Board of Directors on UAC`s aircraft production in 2009 and plans for 2010-2012. Despite the impact of the global financial crisis, UAC delivered 95 aircraft to its customers in Russia and abroad in 2009. In the segment of defense aircraft production 83 new aircraft and aircraft kits were delivered. Another 45 defense aircraft underwent repairs or upgrades at UAC`s enterprises. In 2010, UAC plans to deliver about 120 aircraft and perform more than 40 aircraft repairs and upgrades. UAC`s production plans until 2012 provide for an annual increase in aircraft production by more than 20%. By 2012, the production output should reach 200 aircraft, while at the same time the number of aircraft repairs and upgrades will be reduced.

The Board of Directors also considered for the refinement of the Corporation`s Strategy for the period until 2025. The work on the Strategy improvements will be controlled by the Board of Directors Strategy Committee, headed by Denis Manturov, Deputy Minister of Industry and Trade of the Russian Federation.

At the meeting, the lists of candidates to the UAC`s Board of Directors and to the Audit Committee were approved. In addition, the Board of Directors approved UAC`s budget report for 2009 and the Corporation's budget for 2010, and also approved UAC`s related party transactions.