It’s probable that Russian state bank VEB will acquire a stake in the troubled carmaker AvtoVAZ by getting an issue of its infrastructure bonds and converting them into equity, according to a report by Kommersant business daily.

On the other hand, French carmaker Renault SA, which owns 25 percent of AvtoVAZ’s shares, can avoid dilution of its stake by purchasing into AvtoVAZ’s additional share issue and paying for it with a license and equipment for assembling its Logan model. If the scheme proceeds, state conglomerate Russian Technologies and investment bank Troika Dialog have said that it will see their 25 percent stakes. AvtoVAZ has been pushed to the brink of bankruptcy after demand dramatically dropped. Continued after the jump!

In addition, it fears it may fail to secure another 12 billion rubles ($398 million) in state support it requires to survive. Kommersant business daily also said that an AvtoVAZ manager has said that VEB bank, which acts as a state agent to help key parts of Russia’s economy out of recession, may buy 40 billion rubles worth of AvtoVAZ bonds, says Autonews.

The company would use the proceeds to repay debt while VEB could convert the bonds into AvtoVAZ shares. AvtoVAZ will cut its work force by 25%. It had also forecast a net loss of 35 billion rubles for 2009. Another possibility that is getting a lot of attention is if VEB buys the stake in distressed German carmaker Opel from Russia’s biggest lender, Sberbank, in the event that Sberbank fails to find a domestic carmaker to be its industrial partner.

Tags: avtovaz, ben avtovaz stake, car news, veb bank

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