Tuesday 17 March 2009
State Mulls Boosting Its Stake in AvtoVAZ
The government discussed rescuing AvtoVAZ by increasing its stake in the struggling carmaker through an additional share issue, a Cabinet official said Tuesday after a meeting of the state's anti-crisis commission. No final decision, however, was made on the form or amount of state support that might be offered to AvtoVAZ, the official said by telephone. AvtoVAZ head Boris Alyoshin said last week that the company needed 26 billion rubles ($753 million) to restructure its debt. The company used 45 billion out of 75 billion rubles of its total assets as collateral, Alyoshin said. The company's total debt to suppliers and creditors is 44 billion rubles, Alyoshin told reporters Tuesday after the commission meeting. Alyoshin also said the commission had considered supporting AvtoVAZ by the additional share issue and by increasing the capitalization of shareholder Russian Technologies, which would then help the automaker, Interfax reported. Russian Technologies, Renault and Troika Dialog each have blocking stakes of 25 percent plus one share in AvtoVAZ. Alyoshin said state guarantees would not be enough for AvtoVAZ because of a 10 billion ruble cap on the guarantees, and a default on loan repayments "would lead us to bankruptcy." "Standard means in the form of state guarantees would not work for us," he said. The commission's discussion about an additional share issue startled Renault officials. "We were not notified about such an alternative, we were not even warned that such a possibility exists," Renault spokeswoman Olga Sergeyeva said. She declined to give further comment other than to say that Renault did not have any representatives present during the commission meeting. The meeting, chaired by First Deputy Prime Minister Igor Shuvalov, included Alyoshin, Deputy Prime Minister Igor Sechin, Finance Minister Alexei Kudrin and Samara Governor Vladimir Artyakov, who sits on AvtoVAZ's board of directors. A Troika Dialog representative declined to comment on the possible share emission, saying it was "premature" to do so. AvtoVAZ representatives declined to expound on Alyoshin's comments. The Cabinet official said the anti-crisis commission also discussed other forms of government assistance for AvtoVAZ, including state guarantees, loans from state-owned banks and direct state help. The Economic Development Ministry has been ordered to develop an AvtoVAZ rescue plan for presentation to the government in the next two weeks, the government said in a statement on its web site.
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