State Corporation Russian Technologies, which holds a 70.42% stake in VSMPO-Avisma, a leading producer of titanium and magnesium alloys, including ingots and mill products, is considering reducing its shareholding to a blocking stake.

According to sources with information about the corporation’s plans, it contemplates selling 45.42% of its VSMPO-Avisma shares through the subsidiaries of arms exporter Rosoboronexport – offshore companies Cador Enterprises and Jivanta Ventures. Russian Technologies will only hold its direct interest in the titanium producer. The sources said that the 45.42% stake was bought with borrowed funds and is held in pledge by state-owned banks VTB and Sberbank. The state corporation’s budget is sufficient for servicing these loans only until the second half of 2012.

Russian Technologies borrowed nearly $790mn from the two state banks until March-April 2014. VSMPO-Avisma chief executive Mikhail Voyevodin said that Russian Technologies planned to request the permit of the Economic Development Ministry to sell a part of its stake in VSMPO-Avisma and is drafting a letter asking for such an authorization.