Rostec and Renault increase their shares at Avtovaz to 83.5%

Rostec and Renault increase their shares at Avtovaz from 64,6% to 83,5%. The second stage of the capital increase of the unprofitable AVTOVAZ plant -conversion of 61,4 billion rubles (~975 million USD) debts to shares- has been completed, as told by the head of Rostec: Sergei Chemezov. The final stage of the recovery of the unprofitable car manufacturer will take place in October, as a result of which the shareholders of the group Rostec and Renault will increase their shares in AVTOVAZ from 64,6% to 83,5%. The total infusion of the controlling shareholders in the Togliatti located enterprise amounts to more than 107 billion rubles (~1,7 billion USD). The shares in the joint venture are distributed as follows: Renault 61,1% and Rostec 38,9%.

Rostec and Renault have written off their rights to claim on the debts of the Russian car manufacturer by 30,7 billion rubles (~487 million USD) each, in favour of the joint venture. In return, the alliance has become the participant in a closed subscription of new shares of AVTOVAZ, at the same value. In fact, Rostec and Renault have written off the debts, converting them into company shares. The first additional issue of 26 billion rubles (~413 million USD) worth of AVTOVAZ shares took place in December. Another amount of around 20 billion rubles (~318 million USD) will be lodged by Rostec in October for the statutory purposes of AVTOVAZ, without increasing the share in the authorised capital.

This biggest transaction in the history of Russian automotive, according to Chemezov, will be completed gradually in a number of years. “The measures taken in cooperation with the French partners are designed to update AVTOVAZ” – said the chief executive.

In practice, more than 100 billion rubles (~1,6 billion USD) have been invested in the development of the factory and the brand of Lada, as stated by Rostec. In the meantime, AVTOVAZ will continue operating as a loss-making company. The net loss of the group in accordance with the IFRS has shrunk 4,6 times to 9,7 billion rubles (~154 million USD) in 2017 and the revenues increased by 22% to 225,6 billion rubles (~3,6 billion USD). Moreover, the company began to make an operational profit – 1,6 billion rubles (~25 million USD) in 2017, recovering from the 16,2 billion rubles (~257 million USD) loss in 2016.

Source: RusAutoNews.Com