30 Sep 2009 11:43

Avtovaz board approves anti-crisis program to 2014

MOSCOW. Sept 30 (Interfax) - The board of directors of Avtovaz has approved the anti-crisis program for 2010-2014, the Russian car maker said in a statement.

Avtovaz expects the program will have "an overall economic effect in 2009 totaling 13.852 billion rubles."

The board confirmed "all the basic commitments to the Avtovaz social program accepted in connection with the optimization of the size of the workforce." This most likely involves 12 billion rubles in payments for the 26,700 Avtovaz employees who are being laid off, sources at the company told Interfax previously.

The board also altered management compensation for 2009, ordering "the cancellation of bonus payments and the system of 'golden parachutes' in 2009." Avtovaz is also creating an anti-crisis center to implement the program.

It was reported earlier that Avtovaz plans to raise a 10-year, 12-billion ruble loan with interest payments deferred until 2015 "as compensation for the company's performance of social obligations." It also plans to raise a 42-billion ruble loan for the investment program and to refinance existing short-term liabilities at the Central Bank's refinancing rate with interest deferred until 2014. Russia's largest carmaker has said it will focus on producing new models based on the Renault platform and drop several previous projects.

However, in materials prepared for presentation of the anti-crisis plan, management acknowledges that "despite the serious work in progress to design new models, Avtovaz is not able to finance their further development and movement into production."

On Tuesday Economic Development Minister Elvira Nabiullina said Avtovaz's creditor banks might receive a stake in the company in lieu of payment. Avtovaz's bank debts totaled 42 billion rubles as of September 1.