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    Russia's largest carmaker needs over $2 billion - paper

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    Russia's largest carmaker, AvtoVAZ, urgently needs 70 billion rubles ($2.33 bln) to stay afloat, the Kommersant business daily said on Tuesday.

    MOSCOW, October 6 (RIA Novosti) - Russia's largest carmaker, AvtoVAZ, urgently needs 70 billion rubles ($2.33 bln) to stay afloat, the Kommersant business daily said on Tuesday.

    Russian First Deputy Prime Minister Igor Shuvalov will hold a meeting of a government commission on the car industry later on Tuesday. He is also expected to visit the AvtoVAZ plant in the Volga city of Togliatti on Thursday.

    In a presentation ahead of today's meeting, the ailing car giant said 54 billion rubles ($1.8 bln) would be needed to pay off debts, 9.5 billion rubles ($315.8 mln) to launch an investment program, and another 2.8 billion rubles ($93 mln) to make up for capital outflow expected in 2010, according to Kommersant.

    The company will also need an extra 12 billion rubles ($398.9 mln) to pay off employees facing redundancy, the paper said.

    The company, known for its Lada brand, dominates Togliatti's economy, and is by far the largest local employer.

    As part of an anti-crisis program AvtoVAZ is expected to cut its workforce by up to 27,600 to some 75,000. The company's press service said in late September that 13,000 people of pensionable age, some 5,500 of pre-retirement employees and 9,100 active workers were facing redundancy.

    French carmaker Renault, which holds a blocking stake of 25% in AvtoVAZ, is expected to provide 17.5 billion rubles ($582 mln), otherwise its share will be diluted to 6%, Kommersant said.

    Russian Technology Corporation and Troika Dialog hold 25% each.

    Russian Prime Minister Vladimir Putin pledged efforts on Monday to keep the company going, and said the government could shoulder part of the company's financial burden related to restructuring.

    AvtoVAZ has production capacity of over 800,000 vehicles annually. It has made more than 25 million Lada cars and auto components since it was established in 1970, as a joint project with Italian carmaker Fiat. The company currently produces 15 Lada models priced between 150,000 rubles ($4,800) and 350,000 rubles ($11,240).

     

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