Russian government to raise $1.87 bln to rescue AvtoVAZ carmaker

[sepheronx]

MOSCOW, November 3 (RIA Novosti) - The Russian government is planning to raise 54.8 billion rubles ($1.87 billion) to bail out the ailing AvtoVAZ automaker, Prime Minister Vladimir Putin said on Tuesday.
He said priority would be given to dealing with the company's "bad debts" - around 38 billion rubles ($1.3 billion) plus another 12 billion rubles ($410 million) for modernization and the development of "competitive" new models.
He said about 4.8 billion rubles would be needed for a job creation program.
"In total 54.8 billion rubles," the prime minister said.
He did not explain exactly how the funds would be raised, but said he was counting on "understanding from the creditors."
AvtoVAZ Executive Vice President Oleg Lobanov said on October 19 that as of October 1, 2009, AvtoVAZ's principal debt stood at 62 billion rubles ($2.1 billion), including a 25 billion-ruble ($850 million) loan granted to the carmaker via state corporation Russian Technology, the holder of a blocking stake in the auto giant.
The automaker previously said it may have to file for bankruptcy due to losses and spiraling debts, but that production would not be halted.
The company, known for its Lada brand, is expected to run up 75.2 billion rubles ($2.6 billion) in debt by the end of 2009.
AvtoVAZ, which dominates the economy of the Volga city of Togliatti, earlier announced plans to cut its 100,000-strong workforce by over 25%.

Source


Bad mistake. AvtoVaz should just dissapear. Once gone, someone else will create something else in its place as it would be a big market. And probably end up doing better then AvtoVaz (especially exporting it to other first world countries).

[StickyPop]

Taking tips from the US government on bailouts? Not a good plan.

[zheka130]

as far as I know a large part of the Toliatti city is dependent on jobs from AutoVaz, thus its disappearance would be quite a disaster for the people

[Universal_Soldier]

Originally Posted by zheka130

as far as I know a large part of the Toliatti city is dependent on jobs from AutoVaz, thus its disappearance would be quite a disaster for the people

X2.....it's easy for folks to say the company should just disappear. US economy would have suffered big time if both GM and Chrysler were to just disappear. Russian economy is much smaller and a shock like that will hit the economy much harder. What they need is restructuring and gradually reduce the work force and modernize the entire economy not just the auto sector. Folks getting the pink slip should at least have somewhere else to go. If not closing that company will be an epic fail.

[Mr.K]

Raising money is not enough, management should be demoted, western managers should be hired, and autovaz should become a joint venture with a technology transfer.

[Universal_Soldier]

Originally Posted by Mr.K

Raising money is not enough, management should be demoted, western managers should be hired, and autovaz should become a joint venture with a technology transfer.

snap a finger! and the old will become new.
There isn't many takers out there bro. This is Autovaz where talking about.

[Switek]

Originally Posted by zheka130

as far as I know a large part of the Toliatti city is dependent on jobs from AutoVaz, thus its disappearance would be quite a disaster for the people

And people are quite well armed there...