Bulgarian Minister of Defense Vesselin Vitanov Bliznakov has notified Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT) that the ministry might cancel a €57.33 million contract with the company to upgrade combat helicopters. He claims that Elbit Systems did not meet contractual obligations, even after the ministry sent a warning letter to the company last week.
The “Sofia News Agency” quotes Bliznakov as saying, "Unless this situation changes within three months, we will terminate the contract unilaterally and seek another contractor for the repair work."
The “Sofia News Agency” said that in December 2005, Elbit Systems and the Bulgarian Ministry of Defense signed a contract for the upgrade of 18 Bulgarian Air Force Mi-17 and Mi-24 helicopters over a three-year period. On February 21 this year, Elbit Systems signed a contract with TEREM aviation repair plant for the upgrade. Under the BGN 13 million contract, the repair work will be executed in TEREM's branches in Sofia and Plovdiv. Some 300 employees will be involved in the repairs, the Israeli company then said.
The “Sofia News Agency” said that the project for the modernization of the Bulgarian helicopters was one of 11 upgrade projects for the Bulgarian Army.
Sources inform ''Globes'' that, after the contract was signed, Russia applied heavy pressure on Bulgaria to cancel it, and warned Bulgaria that Russia would not provide licenses for helicopters upgraded by Elbit Systems.
Elbit Systems said in response, “Since we were notified on our selection as the chief contractor in the tender, we’ve fulfilled all our obligations and our part of the contract.”
Published by Globes [online], Israel business news - www.globes.co.il - on August 14, 2006
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