AvtoVAZ plans to implement a plan to recapitalize 85 billion ($1.31 billion) in fulfilling its financial obligations.
In accordance with the proposal this year is expected to raise about 25 billion rubles by public subscription for the shares (in December), the statement of AVTOVAZ. This plan will be submitted to the shareholders during the extraordinary General meeting on 10 October.
The Renault-Nissan Alliance, which owns the main stake of shares of AVTOVAZ and co-owner, the state company rostec, has agreed to participate in the recapitalization, said AVTOVAZ.
AvtoVAZ appealed to the shareholders for help earlier this year, after a significant drop in demand has led to record losses in 2015, and an audit revealed the fragility of their financial situation.
Last month, AVTOVAZ announced that starting from the middle of October main plant in Togliatti switches to four-day work week, as the market continues to shrink because of falling demand.
Despite this, in July there was a 4% increase in sales of Lada, which is caused by the success of the new model of crossover-SUV XRay and Vesta sedan (but for how long is unknown). However, in General, the Russian car market mired in recession and fell a further 17 percent.
Under the influence of the collapse of the automotive market, the automaker recorded for the first six months of this year, a record operating loss of 27.6 rubles, including potari from depreciation of stock.
AVTOVAZ Chairman Sergei Skvortsov said that these measures are necessary to achieve the company targets to increase market share, achieve positive cash flows and improve profitability.
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