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AvtoVAZ Group president Boris Aleshin
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Oct. 17, 2008
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AvtoVAZ Asks for a Billion
AvtoVAZ is concluding negotiations with Vneshekonombank for a credit of $1 billion. The carmaker has over 100,000 unsold vehicles (two months production) stockpiled and needs money in order to defer dealer payments. Two days ago, Russias largest automaker asked Deputy Prime Minister Igor Sechin to help the industry with money, but Sechin made no promises. If AvtoVAZ receives the money from Vneshekonombank, it will last it two months. The final decision on the loan may be made at the meeting of the banks supervisory board next week.
The process by which Vneshekonombank will grant credits from the $50 billion it has received from the Central Bank was announced at a meeting with Russian Prime Minister Vladimir Putin on Monday. The funds are intended for use by troubled big businesses to refinance foreign debts under strictly controlled conditions. AvtoVAZs case is exceptional in that it will use the money to replenish working capital. A source explained that the money was needed to cover expected shortages, as sales have been paralyzed by the financial crisis. AvtoVAZ president Boris Aleshin will meet with dealers today to discuss conditions for the near future. The factory will ship cars to the dealers on 40-day credit.

AvtoVAZ will be the first Russian carmaker to receive state aid during a crisis of liquidity. The heads of the major Russian carmaking groups (AvtoVAZ, KamAZ, the GAZ group and Sollers) met with Sechin on Wednesday in Togliatti, where they proposed to receive $300 million in aid to support a leasing and credit sales program. Sollers recent stopped shipping SsangYong and Fiat models to Income Auto, one of the countrys largest dealers, which is also experiencing money problems. Vneshekonombank is in negotiations with other carmakers as well as AvtoVAZ.

All the Article in Russian as of Oct. 17, 2008

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