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September 30, 2009

RUSSIA: State bank may get AvtoVAZ slice – reports

Russian state bank VEB may get a stake in the troubled carmaker AvtoVAZ by acquiring an issue of its infrastructure bonds and converting them into equity, Kommersant business daily said on Wednesday.

Russian state bank VEB may get a stake in the troubled carmaker AvtoVAZ by acquiring an issue of its infrastructure bonds and converting them into equity, Kommersant business daily said on Wednesday.

Renault, which owns 25% of AvtoVAZ’s shares, may avoid dilution of its stake by buying into AvtoVAZ’s additional share issue and paying for it with a licence and equipment for assembling the Logan, the paper said, according to Reuters.

State conglomerate Russian Technologies and investment bank Troika Dialog will see their 25% stakes diluted should the scheme go ahead, the reports added.

AvtoVAZ is close to bankruptcy and may fail to secure another 12bn roubles (US$398m) of state support it needs to stay afloat. VEB bank, which acts as a state agent to help key parts of Russia’s economy out of recession, may buy 40bn roubles in AvtoVAZ bonds.

The company would use the proceeds to repay debt while VEB could convert the bonds into AvtoVAZ shares, the paper quoted a top manager at AvtoVAZ as saying.

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