“We reviewed the difficulties the company is currently facing … and a decision was made to provide it with state guarantees of 20 billion rubles,” Shuvalov said at a meeting with Prime Minister Vladimir Putin, according to a transcript posted on a government web site.
The money would probably be available by Aug. 1, Shuvalov said.
Putin blessed the decision, telling Shuvalov to carry out the measure ?€?as soon as possible,?€? the transcript said.
The decision could be an end to a long list of tribulations that GAZ and its beleaguered boss, tycoon Oleg Deripaska, have faced in recent months.
Earlier this month, the company’s chief executive announced that it would lay off 6,500 workers at its main plant in Nizhny Novgorod because the government?€™s industry stimulation measures ?€?had not yet brought a significant improvement?€? in the market and that the situation might be even worse in the fall. A day later, GAZ said that worsening market conditions could lead it to close some of its 18 commercial entities.
Last month, the auto manufacturer announced that LDV, a British van maker it bought in 2006, would go into bankruptcy after it failed to find a buyer for the loss-making unit.
And a deal that envisaged Sberbank and Magna purchasing Opel from GM?€™s European unit — which GAZ was invited to join in order to share its production facilities and gain access to new technology ?€” was thrown into doubt when the U.S. automaker announced it was talking to other bidders.
The development also comes one month after Putin gave a public thrashing to the billionaire, castigating him for failing to help employees of Deripaska?€™s factory in Pikalyovo, who blocked a highway in protest after not receiving their salaries for months.
In a statement on its web site, GAZ said the cash infusion will help back unsecured loans, finish the year with no losses and tend to its credit portfolio.
The deal is not the first time the company has taken help from the government ?€” GAZ receives targeted subsidies from federal to local budgets for state automobile contracts. The state is also preparing a special leasing program for strategic auto manufacturers.
At the meeting on Wednesday, Shuvalov also told Putin that the country?€™s top banks needed 215 billion rubles in state guarantees ?€” 85 billion rubles less than envisioned by the anti-crisis budget.
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