Russian Technologies and Renault-Nissan have agreed to form a joint venture (JV) to acquire a controlling stake in AvtoVAZ, the companies said in a statement on Friday (28 September).
In December, they will sign a legally binding agreement that will see the JV consolidate 75% of the Russian automaker. The deal will result in Renault-Nissan’s stake in AvtoVAZ rising to 50% plus one share, with Russian Technologies holding 25% plus one share.
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“A joint venture will be established to manage the assets,” said Sergey Chemezov, director general of Russian Technologies. “The Renault-Nissan alliance will own 67.1% and Russian Technologies, 32.9%. AvtoVAZ’s teaming up with the Renault-Nissan alliance is a strategic partnership to further renovate the manufacturing process and upgrade the [vehicle model range].”
To date, the investments by Renault and Nissan in AvtoVAZ have reached approximately US$130m and US$60m respectively.
Local manufacturing of the B0-based Nissan Almera sedan is “in the pipeline” and the redesigned line will be launched soon, with Renault-branded cars expected to come off the assembly line in the second half 2013. Combined, the alliance and AvtoVAZ hope to secure more than 50% of the Russian market.
Russian Technologies on Friday confirmed its restructuring of AvtoVAZ’s RUB75bn debt (approximately $2.5bn), finally clearing the way for the joint venture with Renault-Nissan.
In its statement, Russian Technologies said: “AvtoVAZ’s debt owed to Russian Technologies was a serious challenge to that, but the transfer of the car producer’s non-core assets as debt repayment helped to address the issue.
“One of the non-core businesses is Avtograd-Vodokanal, a water utility servicing the Avtozavodsky District of Tolyatti and included on the Russian government’s list of facilities of strategic importance. Under the agreement, the asset will be transferred to Russian Technologies as a repayment of AvtoVAZ’s debt, enabling the government to give the green light to the deal.”
In June 2011, AvtoVAZ and Nissan Motor signed an agreement on technical cooperation aimed at better efficiency of plastic components production by AvtoVAZ. The Japanese and Russian teams will collaborate to roll out Nissan’s production standards over the next three years, helping to upgrade the technological processes and achieve a 30% increase in plastic components production capacity without raising funds to buy new equipment.
When upgraded, the facility will be equipped to make plastic parts for Lada, Nissan, and Renault cars.
In May 2012, Renault-Nissan and Russian Technologies signed a memorandum of intent establishing the framework to increase the alliance’s interest in AvtoVAZ from 25% to a controlling stake. The deal is expected to be finalised in July 2014. Renault, which in 2008 acquired 25% of AvtoVAZ, is to contribute around $300m to the JV. Nissan, which is currently not among AvtoVAZ’s shareholders, plans to provide some $450m.
