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    Metal giant raises debt claims to GAZ carmaker to $43.2 mln

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    Russia's Magnitogorsk metals producer (MMK) said on Monday it had increased by 50% the total amount it is owed by the second largest automaker GAZ to 1.5 billion rubles ($43.2 million).

    NIZHNY NOVGOROD, March 16 (RIA Novosti) - Russia's Magnitogorsk metals producer (MMK) said on Monday it had increased by 50% the total amount it is owed by the second largest automaker GAZ to 1.5 billion rubles ($43.2 million).

    The carmaker's debts to creditors and suppliers have reached 45 billion rubles ($1.3 billion) since the start of this year as the automotive industry in Russia struggles with rising prices for auto parts and other supplies and falling sales amid the global financial crisis.

    "The amendment to the claims was due to an increase in interest on the outstanding bills for metal products delivered to the GAZ Group," MMK said.

    A Nizhny Novgorod arbitration court in Russia's Volga region, where the car producer is headquartered, has scheduled hearings on the new claims on April 8.

    The head of another supplier, Novolipetsk Steel, threatened the carmaker with bankruptcy last week if it failed to pay off 1 billion rubles ($28.7 million) for earlier deliveries.

    MMK, however, said the bankruptcy threat "is not the best way out of the situation." And GAZ described it as an "emotional and unconstructive" proposal and said the company was in talks to have its debts restructured.

    GAZ's bankruptcy was also discussed at a meeting presided by Deputy Prime Minister Igor Shuvalov and attended by billionaire and GAZ Group co-owner Oleg Deripaska last month, but the option was rejected and state support was promised.

    The company presented a debt restructure plan to creditors early this month, pledging to reduce production costs and introduce personnel cuts and other measures. The producer has already fired 50% of its employees, reduced top managers' salaries by 30% and cut management expenses in general.

    Experts have said GAZ will not face bankruptcy due to the government's decision to support the manufacturer.

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