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Renault will become majority shareholder of Avtovaz after debt restructuring

September 08, 2016, 18:22 UTC+3 MOSCOW
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MOSCOW, September 8. /TASS/. Renault will become the majority shareholder of Russian carmaker Avtovaz after the company restructures its debt, Chairman of the board of directors of Avtovaz Sergey Skvortsov told reporters.

"As part of the alliance (Remault-Nissan) Renault will get the control, while Nissan will not be financially involved (in debt restructuring - TASS)," he said.

Skvortsov added that although Renault is the leader of the Alliance, but both members of the alliance are partners in technology and production.

"Nissan, in particular, is helping (Avtovaz) with quality improvement. Avtovaz assembles Nissan models, which is very advantageous for it amid the decline in production volumes. Nissan is one of three equal members of the partnership but now we are talking only about participation in additional capitalization - Nissan is not going to participate in it," Skvortsov said.

According to him, Russian state-owned corporation Rostec will still hold the blocking stake in Avtovaz, while stakes will be changing in the course of the issue of additional shares.

"The process will last for more than half a year or a year," he said.

The first stage of the debt restructuring envisages the issue of additional shares for the sum of 25 bln rubles ($391 mln). The shares will be issued before the end of the year. The decision about the restructuring on another 60 bln rubles ($938 mln) of debt may be taken in the first quarter of 2017.

Earlier it was reported that at an emergency general meeting on October 10, 2016 the shareholders of Avtovaz will make a decision about additional placement of the company’s shares.

In particular this will be the first key step to implementation of the plan of general additional capitalization for the sum of about 85 bln rubles ($1.2 bln). This will make it possible for the company to finance its future development activities and to meet current financial obligations. The additional issue of shares may become the first stage of financial rehabilitation bringing it 25 bln rubles ($391 mln).

In 2015, Avtovaz posted the loss of 74 bln rubles ($1.2 bln) as calculated under the International Financial Reporting Standards (IFRS). The company attributed the loss to the costs on launching new models, the crisis on the car market, the decline in purchasing ability of the population and the devaluation of the ruble.

The company also breached the covenants under agreements with banks for the sum of 36.6 billion rubles ($572 mln).

In its financial report the company said that without the support of the shareholders it may have to suspend its operations due to large losses and difficulties with the debt payment.

Amid the financial difficulties the company’s head Bo Andersson, who led the plant since 2013, was replaced by former General Director of Renault in Romania Nicolas Mohr.

The Renault-Nissan alliance holds the controlling stake in Avtovaz, the state-owned corporation Rostec owns the blocking stake. The shareholders managed the company via Alliance Rostec Auto BV.

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