RUSSIA: Government mulls GAZ bailout
The Russian government is widely expected to bail out GAZ Group next week, according to Russian media reports.
Business dailies Kommersant and Vedomosti reported that the moves in government follow a sharp deterioration in the fortunes of the company, which is now facing a liquidity crisis.
First Deputy Prime Minister Igor Shuvalov said Thursday that a government commission would consider on February 3 bailing out a major company that is currently in a "very difficult situation." Shuvalov did not specify the company.
Sources in the government and close to GAZ Group shareholder Russkiye Mashiny said that the government commission would consider helping GAZ Group, which was hit by a plunge in sales because of the economic crisis, both dailies reported.
GAZ Group needs at least US$1.6bn of government financing to survive, officials in the Nizhny Novgorod Region government said in December, Kommersant reported.
The maker of the Volga car and Gazelle light truck was among the first Russian companies to limit production in the crisis, citing falling demand. The outlook for the Russian vehicle market remains very weak, with some analysts saying the car market could fall by as much as 50%.
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