Russia Says Renault To Invest In AvtoVAZ

Official said Renault will inject investments to help keep Russia's largest car company running, but noted that it is not yet clear how much money will be provided.

MOSCOW (AP) -- A top Russian official said Tuesday that French automaker Renault will inject investments to help keep struggling Russia's largest car company running, but that that it is not yet clear how much money the French company will provide.

First Deputy Prime Minister Igor Shuvalov spoke a day after Prime Minister Vladimir Putin met with a high-level Renault executive and reportedly secured a promise of support. Putin warned last week that Renault is risking its 25 percent stake in Avtovaz -- maker of the boxy Lada sedan that has been the mainstay of Russia's car industry since the Soviet era -- by doing too little to help finance it.

Renault "confirmed that it is ready to invest in the development of Avtovaz, including providing the most advanced technology," Shuvalov said in televised remarks.

Renault spokeswoman Gita Roux said that the company is looking at a "range of options" to help AvtoVAZ but won't necessarily put any money on the table.

"We are talking with the Russians to see how we can best help the. We are reviewing a range of options" which could include sharing Renault's know-how and expertise. "It's too early in the day to be very specific. The help we would provide would not necessarily include a cash injection."

Shuvalov said the amount of Renault's investments will be determined later, but stressed that "the most important thing is that Renault has confirmed its strategic interest in the development of Avtovaz."

He said Renault sees its acquisition of the 25 percent plus one share stake as "right and justified," indicating the stake is secure at least for now.

Renault paid $1 billion for its stake in early 2008. Russian Technologies, a sprawling state-controlled conglomerate, retains another 25 percent. Investment bank Troika Dialog also has 25 percent, and the remaining quarter is floated on the market.

AvtoVAZ has announced layoffs of a quarter of its 102,000-member work force as demand flags for the Lada. Its president Igor Komarov said Monday that most of the 27,600 layoffs will affect those who qualify for a pension.

But Shuvalov suggested the number of layoff might be lower, Russian news agencies reported.

Putin said Friday that an interest-free long-term loan of 25 billion rubles (then $735 million) from Russian Technologies had been disbursed to Avtovaz. Shuvalov said Tuesday that the government is prepared to provide the company with another 12 billion rubles ($400 million), Russian news agencies reported.

Associated Press writer Emma Vandore contributed to this report from Paris.

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