1 Jun 2023 09:37

Deal to sell VW's Russian assets to Avilon does not include buyback option

MOSCOW. June 1 (Interfax) - The terms of the deal in which German automaker Volkswagen sold its Russian assets tot-Finance LLC, a company owned by the head of auto dealer Avilon Andrei Pavlovich, do not provide for a buyback option," Deputy Industry and Trade Minister Albert Karimov said.

"Without a buyback option," Karimov told reporters on the sidelines of a ministry meeting on Wednesday when asked about the VW deal.

Art-Finance completed the acquisition of VW's Russian assets in late May. The price was not disclosed. A market source familiar with the decision of the subcommittee of the government commission for control over foreign investment told Interfax earlier that the sale of the VW assets was approved on April 17 for a price of up to 125 million euros. Therefore, on the day of the deal's approval it was worth almost 11.3 billion rubles, while at the current exchange rate the price is over 10.8 billion rubles.

Art-Finance was registered in Moscow in mid-February. It is wholly owned by Avilon Group president Andrei Pavlovich. The company has wholly acquired VW's Russian division Volkswagen Group Rus LLC, as well as its fully controlled local entities Volkswagen Components & Services LLC, Scania Leasing LLC, Scania Finance LLC and Scania Insurance LLC.

The VW plant, located at the Grabtsevo industrial park in Kaluga, has capacity to produce 225,000 vehicles per year. Until early spring of 2022, the plant produced Volkswagen Polo, Volkswagen Tiguan and Skoda Rapid cars. The company also operated a gasoline engine plant in Kaluga with capacity to produce 150,000 engines per year.

Until March 2022, VW also had contract assembly at GAZ facilities in Nizhny Novgorod that produced the Skoda models Octavia, Karoq and Kodiaq and Volkswagen Taos. The contract assembly agreement was terminated in August 2022, and the terms of the breakup are now the subject of litigation between the companies.