MOSCOW, November 3 (RIA Novosti) - The Russian government is planning to raise 54.8 billion rubles ($1.87 billion) to bail out the ailing AvtoVAZ automaker, Prime Minister Vladimir Putin said on Tuesday.
He said priority would be given to dealing with the company's "bad debts" - around 38 billion rubles ($1.3 billion) plus another 12 billion rubles ($410 million) for modernization and the development of "competitive" new models.
He said about 4.8 billion rubles would be needed for a job creation program.
"In total 54.8 billion rubles," the prime minister said.
He did not explain exactly how the funds would be raised, but said he was counting on "understanding from the creditors."
AvtoVAZ Executive Vice President Oleg Lobanov said on October 19 that as of October 1, 2009, AvtoVAZ's principal debt stood at 62 billion rubles ($2.1 billion), including a 25 billion-ruble ($850 million) loan granted to the carmaker via state corporation Russian Technology, the holder of a blocking stake in the auto giant.
The automaker previously said it may have to file for bankruptcy due to losses and spiraling debts, but that production would not be halted.
The company, known for its Lada brand, is expected to run up 75.2 billion rubles ($2.6 billion) in debt by the end of 2009.
AvtoVAZ, which dominates the economy of the Volga city of Togliatti, earlier announced plans to cut its 100,000-strong workforce by over 25%.
