Shareholders in Russia's Avtovaz sign restructuring deal
The shareholders of Russia's largest carmaker Avtovaz, including French giant Renault, announced Thursday that they had signed an agreement on a capital increase for the troubled group.
Renault, state corporation Russian Technologies and Russian investment bank Troika Dialog, currently each own 25 percent plus one share of the struggling carmaker, which makes the Lada model.
Renault agreed to invest the equivalent of 240 million euros (307 million dollars) by 2012 in order to retain its 25 percent plus one share, while Russian Technologies will "convert a proportional part of Avtovaz's debt into shares," the companies said in a statement.
Renault first signed a memorandum on the deal in November with Avtovaz's other main shareholders during a visit to Paris by Russian Prime Minister Vladimir Putin.
On Thursday, the head of Russian Technologies, Sergei Chemezov, detailed how the share sale would affect Avtovaz's capital structure while attending a meeting between Russian President Dmitry Medvedev and German Chancellor Angela Merkel in the eastern Russian city of Yekaterinburg.
"As a result, we will have 29 percent, they (Renault) will have 25 percent, Troika will have a little less than now. The minorities will also be diluted," Chemezov said, referring to small shareholders.
In February, 2008 Renault bought 25 percent plus one share in Avtovaz for one billion dollars.
Avtovaz took a heavy hit during the global financial crisis as its outdated models struggled to compete with foreign brands and it has built up huge debts. A "cash for clunkers" campaign introduced in March has since helpd boost its sales.
© 2010 AFP