Russia’s top corporations team up to give Izhavto a 'second lease' of life
MOSCOW, Russia — Three state-affiliated corporations — Sberbank, AvtoVAZ and Russian Technologies — have signed an MoU on long-term development and modernization of Izhavto, one of the Soviet legendary automobile brands that fell a victim of the global financial crisis in May last year, when it went into inevitable bankruptcy.
Prior to the bankruptcy, the Udmurtia-based Izhavto was among the Top Five Russian automakers, with its signature brands that include the Izh-27175 and VAZ-2104 models that are ubiquitous on the Russian and CIS roads as well as the Kia Spectra and Kia Sorento brands that it assembled locally for the South Korean autogiant.
The MoU was signed by Sberbank CEO German Gref, AvtoVAZ CEO Igor Komarov and Russian Technologies CEO Sergei Chemezov. A sign that the deal has the approval and full support of the Russian government was underscored by the presence of Prime Minister Vladimir Putin at the official penning ceremony of the agreement.
The three signatories to the deal have direct interests in resuscitating the troubled automaker. For instance, Sberbank is the carmaker’s biggest creditor, holding 51% of the company’s shares as collateral. The automaker's aggregated debt to Sberbank prior to its bankruptcy last year was estimated at 8.25bln rubles.
Similarly, AvtoVAZ, which is affiliated with Russian Technologies, became the carmaker’s new strategic partner in December, after it bought off the Hyundai-Kia alliance and acquired the company’s other assets. AvtoVAZ plans to use Izhavto facilities as a production site for some of its brands.
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