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Renault-Nissan Alliance and Russian Technologies Agree to Create Joint Venture to Acquire a Majority Stake in AVTOVAZ OAO

Thursday, 3 May 2012 04:28am EDT 

Renault -Nissan Alliance and state corporation Russian Technologies have agreed to create a joint venture and give the Renault-Nissan Alliance an indirect majority stake in AVTOVAZ, according to a new memorandum of understanding. The Renault-Nissan Alliance, AVTOVAZ, Russian Technologies and Troika Dialog signed the non-binding agreement in Paris. According to the memorandum, the Renault-Nissan Alliance and Russian Technologies will contribute their respective stakes in AVTOVAZ to a joint venture that will control AVTOVAZ, Russia’s car company and maker of the iconic Lada brand. Renault-Nissan plans to invest about USD 750 million, which will give the French-Japanese car group 67.13% of the joint venture in mid-2014. The joint venture will then hold 74.5% of AVTOVAZ. The transaction is expected to be complete by 2014. Renault, which purchased 25% of AVTOVAZ in 2008 and then helped AVTOVAZ pilot an aggressive turnaround, will invest about USD 300 million in the joint venture. Nissan, which does not own a stake in AVTOVAZ, will invest about USD 450 million. Renault and Nissan will make periodic payments through 2014. Russian Technologies has agreed to restructure its outstanding loans with AVTOVAZ with approximately RUB 7 billion (USD 238 million) proceeds from the anticipated sale of AVTOVAZ’s non-core assets being used to repay part of Russian Technologies' loans. 

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