Amtel-Vredestein, the tire producer being acquired by Gazprom's Sibur-Russian Tires, said Tuesday that it had halted production at its Kirov factory because of a working capital shortage.

The Dutch-based company, which has had debt refinancing problems, said it would resume production when it receives a second tranche of a stabilization loan to be provided by Sibur-Russian Tires.

Amtel-Vredestein, which operates production facilities in Voronezh and Kirov, as well as at its Dutch affiliate Vredestein Banden, said it was taking steps to ensure that the Kirov plant will return to normal operating rates and inventory levels as soon as possible.

An emergency general meeting has been scheduled for Aug. 29, at which shareholders are expected to approve the loan, Amtel-Vredestein said in a statement.

"Assuming the second tranche of the stabilization loan is advanced soon after the EGM ... this temporary halt will not affect the company's ability to meet its supply obligations in a timely manner," the statement said.

The EGM will also be asked to approve the acquisition of Amtel-Vredestein by Sibur-Russian Tires, which in June agreed to buy the tire maker for $370 million in a deal that will create a top-10 global tire producer.

Under the terms of the acquisition, Sibur-Russian Tires will control up to 70 percent of the enlarged tire company on successful completion of a share issue while Vadim Gurinov, Sibur-Russian Tires chief executive, will head Amtel-Vredestein.

Amtel-Vredestein said Friday that its net loss widened last year to $243 million on higher interest payments and "significant asset impairment charges," while revenue climbed 29 percent to $994 million.

The Dutch firm also said Sibur-Russian Tires had agreed to provide $40 million as an interim funding facility as part of the June agreement.

In a warning to shareholders last week, Amtel said it "continues to experience working capital shortages, which may lead to production stoppages."

Despite discontinued growth in new borrowings in the second half of 2007, the circular said, the company's net debt increased to $800 million at the end of last year, up 17.8 percent from a year earlier.

"Most of the debt is attributable to Russian operations, where certain covenant breaches and payment delays have occurred during the period without triggering any repayment demands from the financing banks," the circular said.

Amtel-Vredestein said its Vredestein Banden operations were not directly affected by the debt problems in Russia.

"The company's prospects for 2008 are dependent on results of the debt restructuring with the core financing banks of its Russian operations, which is subject to completion of the contemplated merger with [Sibur-Russian Tires]," the statement said.