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Renault Plans €1.2 Billion Bailout for AvtoVAZ
Renault SA plans to fund most or all of an 85 billion-ruble (€1.2 billion) recapitalization of Russian Lada maker OAO AvtoVAZ, Reuters reports.
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Renault SA plans to fund most or all of an 85 billion-ruble (€1.2 billion) recapitalization of Russian Lada maker OAO AvtoVAZ, Reuters reports.
The sale, about 30% of which is expected to occur as a rights issue to Renault shareholders on Monday, would raise Renault’s 8-year-old stake to 72.5% and enable the French company to consolidate AvtoVAZ as a subsidiary.
Reuters says Renault alliance partner Nissan Motor Co., which currently owns 12.5% of AvtoVAZ, is not expected to take part in the recapitalization. When the capital infusion is complete, Nissan’s stake will shrink to 5.5%.
The investment reflects Renault’s conviction that Russia’s collapsing auto market will begin to recover in 2018. Car sales in the country peaked at 3 million units in 2012. Volume, which fell to 1.6 million n 2015, and is expected to drop about 12% this year and remain flat in 2017.
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