AvtoVAZ said seeking protection from creditors is an option it may consider as the government asks for help from partner Renault amid plunging auto sales.
“Seeking protection from creditors is one of the options that our company is considering,” Alexander Shmygov, an AvtoVAZ spokesman, said Monday.
The government has given AvtoVAZ 25 billion rubles ($853 million) in emergency loans, while the carmaker has slashed salaries and announced plans to eliminate thousands of jobs.
AvtoVAZ will owe 76.3 billion rubles to financial backers and 9.8 billion rubles to suppliers by the end of the year, the Industry Ministry said last week.
Renault paid $1 billion for 25 percent of AvtoVAZ in 2007 and is discussing its role in a recovery plan with other shareholders including the government.
Prime Minister Vladimir Putin said earlier this month that Renault would have to invest more cash or see its stake diluted.
“If the other options don’t succeed, then we have no other choice,” executive vice president for finance Oleg Lobanov told reporters, referring to the prospect of bankruptcy. He added that the company has 22,000 extra staff on its payroll that are not anticipated to have any work before 2012.
Carlos Ghosn, chief executive officer of both Renault and Nissan, said he’s prepared to support AvtoVAZ.
It’s “very difficult not being in trouble,” Ghosn said in Tokyo on Monday. “We understand that. We are here to support AvtoVAZ.”
As it seeks to avoid bankruptcy, AvtoVAZ plans to sell 50 billion rubles of convertible bonds to state banks, Igor Burenkov, a spokesman for AvtoVAZ, said Monday.
AvtoVAZ, Renault and Nissan will invest 240 million euros ($359 million) to revamp production and make five new models, Burenkov said Oct. 16.
Renault and AvtoVAZ will begin joint production of vehicles based on the French carmaker’s no-frills Logan sedan in 2012, with Nissan models to follow, AvtoVAZ President Igor Komarov told reporters Oct. 9.
Renault and Nissan will provide 75 percent of the investment, he said.
Ghosn said to be competitive in Russia, the three carmakers needed to work together.
“The only way you can do this is to have a common platform with AvtoVAZ, Renault and Nissan, and with the common platform, we derive three different cars with common suppliers, big volume,” he said. “This is something on which we are working.”
AvtoVAZ said last week that its first-half loss widened to 19.5 billion rubles from 2.15 billion rubles a year earlier.
Revenue declined 46 percent to 53.1 billion rubles.
The carmaker plans to make 300,000 vehicles this year, or fewer than three units per worker. Last year, AvtoVAZ manufactured about 920,000 cars.
(Bloomberg, Reuters)
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Remind me later.