More about the Kinetic Group acquisition: Q&A

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Who is CSG?

The Czechoslovak Group (“CSG”), based in Prague, is a leading industrial technology company operating in five strategic business segments: Defense, Aerospace, Ammunition, Mobility and Business Projects. It is 100% controlled and led by entrepreneur Michal Strnad, who has transformed it into the preeminent Czech industrial group, with a strong international footprint. CSG employs more than 10,000 people worldwide and owns and manages a diverse portfolio of industrial and trade companies across the civil and defense sectors. CSG has a demonstrated history of supporting the long-term growth and success of the companies it acquires.

 

Why is CSG acquiring Vista’s Kinetic Group (former Vista Sporting Products)?

With this acquisition, CSG will become one of the most important ammunition manufacturers in the world with a comprehensive portfolio across all calibers. CSG acquires companies to operate and invest in over the long term – and that is its intent with the Vista Sporting Products business. CSG understands the special importance of the brands that are part of this business to American consumers.CSG intends to respect and maintain the production quality and supply of the legacy brands that Americans have relied on for decades.

 

Where does CSG currently sell ammunition?

CSG sells to customers around the world.CSG sells small-caliber ammunition to end customers for competitive shooting, recreational shooting, hunting and personal/home defense. A smaller part of CSG’s business is selling to the defense and law enforcement sectors in NATO and EU countries. CSG also supplies to NATO armies and Ukraine.

 

What countries does CSG supply armaments to?

CSG companies are major suppliers to the Army of the Czech Republic as well as the Ukrainian Army. Another important market is Indonesia, where CSG companies supply, for example, a comprehensive air defense system.

 

Does CSG currently sell to law enforcement in the U.S. and/or the U.S. military?

CSG companies have supplied law enforcement in the U.S. with POLR-1 radars. They also supply the U.S. Army with components of Soviet-origin air defense systems for training purposes. Working with Raytheon, with the support of the U.S. government, CSG KAI provided training for Afghan helicopter pilots and mechanics before the Taliban took over the country.

 

What is CSG´s role in artillery ammunition´s industry?

In Europe, we are important player in the area of artillery ammunition, one of its top five producers on the old continent and we play important role in deliveries of this strategic commodity both for NATO countries and for Ukraine.

 

Someone may claim that big American brands of small caliber ammunition should stay in American hands. What´s your comment to this?

We are of the opinion that a company like us, an expert trader and producer in defence and small calibre ammo segment seated in NATO country, US ally, which holds and develops companies in long term and not for the sake of financial speculations, is the right owner who actually minimizes any risks for US customers, be it in civil or law enforcement segment. We will bring to US small calibre ammo producers stability and investments which they need.

 

Are there any restrictions in supplying small caliber ammunition to US defence and law enforcement customers if a producer is owned by a foreign entity?

We are not aware of any such restrictions, we would note that Fiocchi – owned 70% by CSG and before that by an Italian entity – has for years, and continues to, sell ammunition to law enforcement distributors. For example, in 2023 Fiocchi sold ammunition directly to the Department of Homeland Security. Further, PMC, a South Korean ammunition manufacturer, sells to U.S. law enforcement through FieldUSA.com – a lawenforcement-only distributor. There are many other similar examples in the market.

 

Do you have any special relation to Russia or Russian regime?

First of all this is all nonsense and facts speak clearly: We are strategic supplier of defence products for NATO countries, several of our companies are holders of national and NATO security clearance level Secret, we are very important supplier of Ukrainian Army and we have rich legacy of cooperation with US companies like Raytheon or GD. Thanks to acquisition of Fiocchi last year we had to pass the screening of CIFIUS. None of this would be possible if we have any ties to Russia. The reason why these attacks appear in public space is apparently to damage our reputation. I will not speculate about the perpetrator. We don´t waste our time on this because we know that regulators or institutional shareholders are professionals who decide based on hard facts.

 

Does CSG cooperate with Chinese Huawei?

There was a claim that DAKO-CZ, a member of the CSG group, cooperated with the Chinese company Huawei. It is misleading and false. DAKO-CZ did not cooperate with Huawei. It supplies braking systems for rail vehicles for the well-known Swiss company Stadler which operates also in USA. One of Stadler's projects is the delivery of trains for Huawei's Dianshan Lake campus in China. Fabricating the claim that CSG is working with Huawei from this real information is a typical example of fake news.

 

What will be your first steps, decision once the transaction is successfully closed?

Firstly, we need to start working together with the Management on existing tasks and see what is left there from the spin off. Even for them it is going to be a new situation being on their own. Depending on the closing date, we will see how far in the new fiscal year we are. Obviously, the plan or a budget for the next year is still their decision so we will need to understand the opportunities and risks associated with that plan and take it from there.

 

How are you going to manage the Kinetic group/ Sporting division?

Kinetic Group together with Fiocchi group will part of our Ammo+ division which focuses on small calibre ammo production and is led by David Štěpán, board member of CSG. We see our added value in bringing production experience from Europe and other markets. The idea is to bring together the best procedures and processes from both groups and to be better in what we do every day. On the other side, we are ready to help the company to get their products also outside of US.

 

Are you planning to expand the Kinetic group products outside of USA? Are you planning any transfer of technology, any JVs, partnerships with foreign entities etc.

The priority for us is the US commercial market. Secondly, our group is strong in the defence segment so we will also focus on future supplies to NATO countries, and NATO partners. We are convinced Remington and Federal are able to successfully compete in EU and other markets.

 

How is Fiocchi of America going to fit to the new structure?

Fiocchi of America is still 100% subsidiary of Fiocchi Munizioni, the Italian parent entity where CSG has 70% ownership and that remains valid even after the Kinetic group acquisition.

As a group and withing the Ammo+ division, we will be looking at possible optimalisations and effective capacity utilisation. The obvious possibility is to limit the transportation of ammo components from Italy to Fiocchi of America and use the available production capacity of Kinetic Group. This will also allow the Fiocchi Italy redirect its additional production capacity towards other markets. However, this area is very complex, we will need to respect a number of laws and regulation as well as the existing agreements.

The utmost important for us is, there is no adverse impact on our customers so they get the products they are used on the shelf on time and they keep relying on quality and customer service they are used to.

 

Did CSG´s member company ELDIS deliver radars to China?

ELDIS, which holds Czech national and NATO security clearance level SECRET, which was last extended in 2022 and is valid until 2029, concluded a contract in 2018 for the supply of 13 radars for civil air traffic control to China. This was a standard deal that does not establish any special relationship between CSG and China. The information about this project is publicly available at ELDIS´es official website and in several media. ELDIS is traditional producer of ATM radars which for example cover the whole airspace of India.

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