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INFORMATION LETTER on the situation at JSC "Semipalatinsk Machine-Building Plant" (as of March 20, 2023

JSC "NC" Kazakhstan Engineering "(hereinafter - the Company) in its activities adheres to the policy of openness and transparency, in connection with which it constantly informs about the current situation at JSC" Semipalatinsk Engineering Plant "(hereinafter - JSC "SMZ" / Plant ).

This information note is an addition to previously posted materials on the activities of SMZ JSC (available via the links):

Recall that SMZ JSC is not an enterprise belonging to the country's military-industrial complex, is not included in the register of domestic manufacturers of military goods (products), dual-use goods (products) (applications) and domestic suppliers of military works and military services. appointment of the state defense order .

According to subparagraph 6) of Article 12 of the Law of the Republic of Kazakhstan “On Rehabilitation and Bankruptcy” (hereinafter referred to as the Law), for the period of the rehabilitation procedure and the bankruptcy procedure, all bodies of the debtor are removed from management and the rehabilitation manager acts as the sole management body of the debtor .

From the beginning of the rehabilitation procedure of SMZ JSC, the Company was removed from the management of the Plant, as it was not included in the Meeting and the Committee of Creditors of SMZ JSC, in order to prevent its bankruptcy.


At an operational meeting held on October 26, 2022, at the initiative of the Company, members of the Creditors’ Meeting were invited to start the search for potential participants in the rehabilitation of SMZ JSC. This initiative met with support from creditors.

The Committee of Creditors of SMZ JSC (Minutes No. 2 dated October 26, 2022) decided to announce a tender for the search for a sanation participant (investor) to correct the financial and economic activities of SMZ JSC.

On October 31, 2022, the Company provided the members of the Meeting of Creditors of SMZ JSC with proposals from potential participants in the reorganization of SMZ JSC received by the Company from Oljakol LLP and the private company Prime Management Ltd.

On November 25 this year, at a meeting of the Committee of Creditors, proposals for the rehabilitation of Oljakol LLP and PE Prime Management Ltd were considered, where the Committee decided to study the financial viability of potential sanatoriums after the court approved the adjusted Rehabilitation Plan of SMZ JSC.

On January 10, 2023, the decision of the Specialized Interdistrict Economic Court for the East Kazakhstan region to approve changes to the Rehabilitation Plan in terms of attracting a participant in the rehabilitation came into force.

In this regard, on January 09, 2023, the rehabilitation manager of SMZ JSC Alenov M.B. Letters were sent to potential participants in the reorganization (PM "Prime Management Ltd." and LLP "Oljakol") about the need to update previously submitted proposals and bank statements on the availability of funds.

According to Alyonov M.B. (letter No. 103 dated February 20, 2023), Oljakol LLP expressed its readiness to participate in the sanitation procedure of SM3 JSC.

After placing an announcement about the search for a participant in the reorganization , a number of companies (PE Investment and Industrial Company IR-Group, Nur Alfinur LLP) contacted SMZ JSC in order to study financial statements and potential investment opportunities. Also, interest in the Plant was shown by the SEC of the Abai region.

Since the main requirements of all those who applied were to conduct an independent audit of the financial activities of the enterprise, a competition was announced for an independent audit of SMZ JSC, following which Atameken Audit LLP was declared the winner, which issued the audit results on March 17, 2023 (letter of JSC " SMZ" to the Company No. 136 dated March 17, 2023).

In accordance with paragraph 1 of Article 81 of the Law, the participant in the rehabilitation, based on the decision of the shareholder of the company, receives the right of ownership of the shares of the company in the amount of funds invested by him.

In this regard, the Company initiated an independent assessment of SMZ JSC to determine the number of shares to be sold to a participant in the rehabilitation if he achieves the goal of the rehabilitation.


From October 31 to November 15, 2022, the Internal Audit Service of the Company (hereinafter - IAS) conducted an audit at SMZ JSC, during which the effectiveness of the use of funds allocated for the implementation of the investment project "Creation of the assembly production of MAZ vehicles", as well as the procedures plant rehabilitation. Numerous findings of a critical and important (significant) nature have been identified.

All facts are collected and transferred to law enforcement agencies.

At the same time, on November 16, 2022, the Prosecutor’s Office of the Abay Region, as part of responding to information received from the Company, as well as violations of the rights of the Plant’s employees, initiated a large-scale inspection of SMZ JSC (Decree of the Semey Prosecutor on the inspection No. 7221910100100039) for the legality of spending funds, implementation of the rehabilitation plan, tax and labor legislation, the Law “On counteracting the legalization (laundering) of proceeds from crime and the financing of terrorism”. The period to be tested was January 1, 2014. In addition to employees of the prosecutor's office, specialists from the department of economic investigations, the labor inspectorate of the department for monitoring labor legislation were involved in the audit.

The results of the audit are reflected in the Audit Certificate of JSC "Semipalatinsk Machine-Building Plant" dated December 27, 2022 (hereinafter referred to as the Certificate), according to which the Prosecutor's Office of Semey confirmed numerous facts of a critical nature identified during the audit of the Company's IAS.

The Procurator of the city of Semey is carrying out further work to call officials and employees of the Plant to provide explanations (explanations) on the facts indicated in the Certificate.

In turn, on February 22, 2023, the Compliance Service of the Company sent requests to the prosecutor’s office and the Department of Economic Investigations for the Abai region about the procedural measures taken in relation to the former management of SMZ JSC on the facts revealed during these inspections. Responses to these requests from the Compliance Service have not been received to date.