The AvtoVAZ board of directors has agreed to transfer the ownership of the company’s testing ground to the state as part of Russia’s largest carmaker’s effort to shed its hefty debts, the Moscow Times reported.
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AvtoVAZ will yield its testing ground, located 30 miles (50 kilometres) from Tolyatti, where the carmaker is based, to the state in an attempt to pay off some of its debt to the federal government, the company said in a statement cited by the paper. No timeframe was given for the transfer.
As of 1 March, the carmaker’s debt to the state stood at 2.4bn rubles ($US86.2m), Interfax reported.
It cost around $80m to build the testing ground, AvtoVAZ spokesman Vladimir Yakushenko told the Moscow Times, adding that the company would be able to use it in the future.
Yakushenko reportedly did not specify the current value of the testing ground or how much of the carmaker’s debt to the state would remain.
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By GlobalData“AvtoVAZ needs to write off its debt with as few casualties as possible,” Slava Smolyaninov, an auto-industry analyst at UralSib, told the paper.
The report noted that, following the installation of state-friendly management late last year, the struggling automaker embarked on a major revamp in February, pledging around $US5bn in new investment. It plans to build a new plant and begin production of a dozen new models in the next five years. To carry out its sweeping plans, AvtoVAZ has been seeking to restructure or entirely pay off its debt.
Yakushenko reportedly said the board reviewed several draft designs for the new models, but he declined to elaborate.
The Moscow Times said Yakushenko also denied an Interfax report from earlier this week that said AvtoVAZ was looking to acquire truckmaker ZiL and carmaker Moskvich, which is no longer in operation.
