Russian car giant Avtovaz, maker of the Lada, said that it may have to file for bankruptcy if it fails to refinance its debt, a company representative said yesterday.
Avtovaz, which is 25 per cent owned by French carmaker Renault, plans to issue $1.70 billion worth of convertible bonds worth to repay debt and a company official said during a press conference at the car maker's headquarters in Togliatti, that the carmaker would not rule out bankruptcy if it fails to refinance its debt.
"If there are no other options left, we'll have no other choice," Oleg Lobanov, vice-president finance, told at the press conference.
Lobanov said that the carmaker would borrow at market rates to fund its investment program through 2014 if it succeeds in raising $1.70 billion through convertible bonds or else would restructure its debt to banks like OAO Sberbank, OAO Bank VTB and state development bank Vnesheconombank, or VEB.
Avtovaz, which fell to 24.7 billion roubles ($799 million) net loss last year after a profit of 3.7 billion roubles in 2007, had a net debt of $2.1 billion last month and Igor Komarov, the company's president feels that it could rise to $2.6 billion by the end of the year.
In July, Avtovaz vice president Igor Komarov had announced plans to cut 27,691 jobs amidst plummeting demand for its cars, which also affected steel mills, tractor plants, mines and construction sites across Russia and pushed up unemployment levels in Russia. (See: Russian carmaker Avtovaz to cut 27,700 jobs: report)