OREANDA-NEWS. Fitch Ratings says the initial agreement to sell up to a 25% stake in Russian Helicopters (BB/Stable) to the Russian Direct Investment Fund and a pool of Middle Eastern investors, signed at the St. Petersburg International Economic Forum, will have no immediate effect on the company's ratings. The sale of the minority stake is unlikely to undermine the strategic importance of Russian Helicopters to its ultimate parent, the Russian Federation (BBB-/Negative).

Certain key details, such as the timing and the value of the transaction, as well as the future role of the new shareholders in decision-making, are unknown at this stage. However, we expect any proceeds from the sale of a minority stake to be reinvested in Russian Helicopters, aiding the company's research and development and capital expenditure plans, strengthening the financial profile of the company. Furthermore, the presence of a new minority shareholder may improve corporate governance in our view.

Russian Helicopters' rating currently benefits from a one-notch uplift for support from the state. We believe that even if the shareholding of the state in the company were to decline by the proposed 25%, the strategic importance of Russian Helicopters to the Russian government would not diminish, nor would the continued state support the company receives.

The potential sale of the minority stake in Russian Helicopters is in line with the Russian government's plan to privatise some of the fully state-owned entities such as PAO Sovcomflot (BB/Stable), PJSOC Bashneft (BB+/Stable), OJSC Rosneft (NR), in order to boost the budget of the Russian Federation, the available pool of investment funds for the related companies, and improve corporate governance. According to the open sources, the deal will be finalised by the year end. However, Fitch notes that it may be hard to achieve as Russian Helicopters remains on a list of strategic companies which prohibits its sale to any foreign investors. The timing and other key details of the potential deal are therefore subject to numerous administrative hurdles.