Russia's AvtoVAZ Says Bankruptcy Possible

MOSCOW (AP) -- Troubled Russian carmaker AvtoVAZ said Monday that it may have to file for bankruptcy if it fails to refinance its debt, Russian news agencies reported.

The company is both loss-making and burdened by debt and plans to cut thousands of jobs in the next couple years to survive.

"If there are no other options left, we'll have no other choice," Oleg Lobanov, the company's vice-president in charge of finance, told a press conference in the Volga river city of Togliatti, where the company is headquartered.

"In any case we are not talking about a halt of production, but we are talking about certain legal procedures which will entail getting extra time to solve the issue of debt restructuring."

AvtoVAZ is inviting state-owned banks to buy some of its planned 50 billion ruble ($1.7 billion) bond float.

The carmaker reported a 19.6 billion ruble ($668 million) loss in the January-June period this year as demand shrank.

Russia's car market was on the way to become Europe's largest before the economic crisis erupted. New car sales in Russia shrank by 51 percent in the first three quarters of the year compared to a year earlier, according to the Association of European Businesses.

As of early September, AvtoVAZ's core debt came to 62 billion rubles ($2.1 billion). The company's president Igor Komarov said it could rise to 75.2 billion ($2.6 billion) by the end of the year.

Komarov also announced a review of plans to cut staff at the Togliatti factory, reducing the number of jobs to be cut by 2012 to 21,800 from the earlier announced 27,600.

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