AvtoVAZ has reached an agreement to restructure 28 billion rubles ($957 million) of debt with Sberbank and VTB and will sign the agreements shortly, CEO Igor Komarov said Friday.
The carmaker will use funds provided by its state-run shareholder Russian Technologies, said Komarov, who was accompanying Prime Minister Vladimir Putin as part of a delegation to Caracas.
The state-run banks, AvtoVAZ's two main creditors, will give the carmaker a five-year credit line with a "discount interest rate," he said, Interfax reported.
The announcement sent the automaker's MICEX-traded shares up 2 percent, outperforming the broader market, which closed almost level Friday.
In December, the government approved a plan to give another 28 billion rubles to the company once it reaches an agreement with banks to restructure debt and finalizes its business plan.
AvtoVAZ debt is about 38 billion rubles, and it has not yet decided where the remaining 10 billion rubles should come from, Komarov said. The company needs a total of 43 billion rubles to 45 billion rubles through 2020.
"We will start operating at a profit in 2011," the chief executive officer said.
Komarov also said Friday that the country's cash-for-clunkers program had contributed to AvtoVAZ's first monthly increase in sales since 2008. The company sold 34,177 cars in March, up 13 percent from March 2009 and up 70 percent compared with a month earlier, the company said.
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