Putin Promises Big Money on Visit to AvtoVAZ
Prime Minister Vladimir Putin showered AvtoVAZ with promises of cash, guarantees and loans worth more than $1 billion Monday as he met with Tolyatti plant workers on a visit aimed at boosting morale.
"I have some news: good and bad. What shall we start with?" Putin said, seated in the center of a group of AvtoVAZ employees circled by shiny Lada cars.
"The bad news? OK. The indexes of the global economy, which we are dependent on, are not offering us any reassurances yet," Putin said, according to a interpretation posted on the government's web site.
The good news, he said, was that the superintendence would provide the indebted car giant with an interest-free loan worth 25 billion rubles ($734 million) through Russian Technologies, which owns a stake of 25 percent plus one share in the company.
AvtoVAZ CEO Boris Alyoshin once asked the superintendence for 26 billion rubles to restructure debt to suppliers and creditors. Some 45 billion rubles of AvtoVAZ's 75 billion rubles in assets is being held as collateral, and the company can no longer take out loans with commercial banks, he said earlier this month.
The superintendence earlier discussed the likelihood of increasing the government's stake in AvtoVAZ by boosting the capitalization of Russian Technologies.
Renault, which owns 25 percent plus one share of the company, opposed the possible dilution of its shares. Troika Dialog holds a similar amount, while the rest are traded on the open market.
Both Industry and Trade Minister Viktor Khristenko and Russian Technologies head Sergei Chemezov suggested at a separate meeting with Putin and industry leaders Monday that the money given to Russian Technologies be converted to AvtoVAZ shares.
Putin, however, said the regulation "will not insist on decreasing shareholder stakes, including minority ones."
Alyoshin asked for an 8 billion-ruble bridge loan so the company could "survive" the next two months as it waits for the state loan to come through.
Putin said the bridge loan would be issued by Sberbank and VTB soon, Interfax reported. He also said several times that the 25 billion rubles needed to reach AvtoVAZ "quickly."
Alyoshin said Gazprombank, VTB and Sberbank were ready to lend an additional 90 billion rubles to finance AvtoVAZ's anti-crisis program, which aims to lower annual origination costs by 19 billion rubles.
A VTB spokeswoman, however, said the deal for 90 billion rubles in financing is only a "framework" document signed by the three banks.
The promises of support came as Khristenko offered a grim picture of the car market. "January and February figures showed that the market might fall by as much as 60 percent in juxtaposing with 2008," he said.
Faltering demand has led most Russian carmakers to suspend putting out lines. AvtoVAZ initially followed a different tactic with its labor force of more than 100,000 workers, keeping its lines open, but several component makers stopped deliveries when the company's funds ran dry.
Putin also said the oversight would hand out 13.6 billion rubles in state guarantees on loans to other carmakers, including 4.6 billion rubles to KamAZ, 5 billion rubles to Sollers to build a plant in the Far East and 4 billion rubles to GAZ.
To reassure AvtoVAZ workers, Putin also promised 621 million rubles to subsidize social programs that were traditionally paid for from AvtoVAZ's budget. "This is another gift to AvtoVAZ from the Russian management," Putin said in response to a question about funding for kindergartens.
Putin also told the workers that he had bought a Niva -- also known as a Lada 4x4 -- and was finalizing the ownership paperwork.
Putin at one time has shown a fondness for armored Mercedes sedans and a collector's edition Volga, which he has showed off to guests like former President George W. Bush at his Novo-Ogaryovo residence outside Moscow.
"We all know what was happening in the country, in Tolyatti, in the '90s, what kind of owners and criminal plots surrounded AvtoVAZ," Putin told the workers, taking a jab at businessman Boris Berezovsky, who controlled the plant at the time.
Implying that times are different despite the difficulties, Putin said, "I am sure in the good future of your company."
"I have some news: good and bad. What shall we start with?" Putin said, seated in the center of a group of AvtoVAZ employees circled by shiny Lada cars.
"The bad news? OK. The indexes of the global economy, which we are dependent on, are not offering us any reassurances yet," Putin said, according to a interpretation posted on the government's web site.
The good news, he said, was that the superintendence would provide the indebted car giant with an interest-free loan worth 25 billion rubles ($734 million) through Russian Technologies, which owns a stake of 25 percent plus one share in the company.
AvtoVAZ CEO Boris Alyoshin once asked the superintendence for 26 billion rubles to restructure debt to suppliers and creditors. Some 45 billion rubles of AvtoVAZ's 75 billion rubles in assets is being held as collateral, and the company can no longer take out loans with commercial banks, he said earlier this month.
The superintendence earlier discussed the likelihood of increasing the government's stake in AvtoVAZ by boosting the capitalization of Russian Technologies.
Renault, which owns 25 percent plus one share of the company, opposed the possible dilution of its shares. Troika Dialog holds a similar amount, while the rest are traded on the open market.
Both Industry and Trade Minister Viktor Khristenko and Russian Technologies head Sergei Chemezov suggested at a separate meeting with Putin and industry leaders Monday that the money given to Russian Technologies be converted to AvtoVAZ shares.
Putin, however, said the regulation "will not insist on decreasing shareholder stakes, including minority ones."
Alyoshin asked for an 8 billion-ruble bridge loan so the company could "survive" the next two months as it waits for the state loan to come through.
Putin said the bridge loan would be issued by Sberbank and VTB soon, Interfax reported. He also said several times that the 25 billion rubles needed to reach AvtoVAZ "quickly."
Alyoshin said Gazprombank, VTB and Sberbank were ready to lend an additional 90 billion rubles to finance AvtoVAZ's anti-crisis program, which aims to lower annual origination costs by 19 billion rubles.
A VTB spokeswoman, however, said the deal for 90 billion rubles in financing is only a "framework" document signed by the three banks.
The promises of support came as Khristenko offered a grim picture of the car market. "January and February figures showed that the market might fall by as much as 60 percent in juxtaposing with 2008," he said.
Faltering demand has led most Russian carmakers to suspend putting out lines. AvtoVAZ initially followed a different tactic with its labor force of more than 100,000 workers, keeping its lines open, but several component makers stopped deliveries when the company's funds ran dry.
Putin also said the oversight would hand out 13.6 billion rubles in state guarantees on loans to other carmakers, including 4.6 billion rubles to KamAZ, 5 billion rubles to Sollers to build a plant in the Far East and 4 billion rubles to GAZ.
To reassure AvtoVAZ workers, Putin also promised 621 million rubles to subsidize social programs that were traditionally paid for from AvtoVAZ's budget. "This is another gift to AvtoVAZ from the Russian management," Putin said in response to a question about funding for kindergartens.
Putin also told the workers that he had bought a Niva -- also known as a Lada 4x4 -- and was finalizing the ownership paperwork.
Putin at one time has shown a fondness for armored Mercedes sedans and a collector's edition Volga, which he has showed off to guests like former President George W. Bush at his Novo-Ogaryovo residence outside Moscow.
"We all know what was happening in the country, in Tolyatti, in the '90s, what kind of owners and criminal plots surrounded AvtoVAZ," Putin told the workers, taking a jab at businessman Boris Berezovsky, who controlled the plant at the time.
Implying that times are different despite the difficulties, Putin said, "I am sure in the good future of your company."
