OREANDA-NEWS. On February 29, 2008, Sergey Chemezov, Director General of the Rostekhnologii State Corporation and Chairman of the AVTOVAZ Board of Directors, Anatoly Isaykin, Director General of Rosoboronexport, Boris Alyoshin, President of the AVTOVAZ Group, Carlos Ghosn, President and CEO of Renault, Ruben Vardanyan, Chairman of the Troika Dialog Group, and Sergei Skvortsov, President of the Troika Capital Partners Company, signed agreements confirming the strategic partnership between AVTOVAZ and Renault, reported the press-centre of Rosoboronexport.

According to the signed agreements, Renault buys a 25% stock in AVTOVAZ from the Troika Dialog Group. The amount of transaction is $1 bln plus deferred payment, the amount of which will depend on AVTOVAZ' Earn Out in 2008-2009. As a result, the Rostekhnologii State Corporation and Renault will become equal shareholders of the AVTOVAZ Company in the long-term and promising partnership.

Once the capital of AVTOVAZ has been restructured in the first half of 2008, the Rostekhnologii State Corporation and Renault will own each 25% of common and preferred stock in the Togliatti plant.

In addition, the parties have agreed to hold in the fall of 2008 the secondary public offering of a stake in AVTOVAZ owned by the Troika Dialog Group.

Also, the Troika Dialog Group, Renault as well as AVTOVAZ, the Rostekhnologii State Corporation and Rosoboronexport became the parties to the Memorandum on Principles of Cooperation confirming the strategic partnership between AVTOVAZ and Renault.

The reached agreements are the result of successive two-year talks held between AVTOVAZ and Renault and have finally consolidated a qualitatively new level of cooperation between Russia and Europe in the automotive industry whose prerequisites were outlined in a Memorandum of Understanding signed by the partners on 8 December, 2007 in Togliatti.

The strategic partnership will allow AVTOVAZ to join the Renault-Nissan Alliance, world’s  fourth car making group in terms of output. It is expected that by 2014 AVTOVAZ and Renault will manufacture up to 1,5 million automobiles a year in Togliatti. While expanding and renewing the plant’s product line-up, the parties will take steps to preserve and further improve the LADA brand in order to maintain its leading positions on the Russian car market. The first car under the LADA brand, developed according to the Memorandum on Principles of Cooperation, may appear on the market as soon as the end of 2009. Under the agreement with AVTOVAZ and its shareholders, the sales of these cars will be consolidated by Renault. Thus, Russia will become for Renault the biggest market in terms of sales.

To increase the appeal, competitiveness and quality of the plant’s products, AVTOVAZ and Renault intend to exchange technologies and know-how, especially in the manufacturing and marketing areas. AVTOVAZ will use Renault’s technology proposals related to platforms, engines and powertrains to renew and expand its range of products at short notice.

To effectively integrate and turn AVTOVAZ into the leading automaker in Russia, Renault has proposed its four top managers for key positions in the plant’s Board of Directors, who will become AVTOVAZ employees:

Yann Vincent, Senior Vice President, Chief Operating Director;

Huges Desmarchelier, Vice President, Executive Vice-President, Plan, Product Planning and Programs

Senior Vice-President, Controlling - whose name will be announced later;

Christian Muller, Executive Vice-President, Purchasing

Three Renault representatives will join AVTOVAZ’ Board of Directors consisting of twelve persons. They are President of the Renault Group Carlos Ghosn and Executive Vice Presidents Patrick Pelata and Thierry Moulonguet.

An ad-hoc Joint Strategic Committee will deal with developing a strategy and coordinating joint activities of the two automakers, with each of them preserving its autonomy in strategic decision making.

“It is a great honor for us to cooperate with AVTOVAZ,” said President of the Renault Group Carlos Ghosn. “I’m sure the Russian car market will become one of the biggest in the world in the coming years, while AVTOVAZ will be its major player. To this end, we’ll exchange ideas, technologies and engineering achievements and cooperate in marketing and development of a product line-up under the LADA brand on a mutually beneficial basis.”

Sergey Chemezov, Director General of the Rostekhnologii State Corporation and Chairman of AVTOVAZ’ Board of Directors, noted in his turn that “the joint planned and consistent activity of Renault, Rostekhnologii State Corporation, Rosoboronexport, AVTOVAZ and the Troika Dialog Group will turn Togliatti giant car plant into a prosperous firm building a range of non-expensive, high-quality and competitive automobiles both for Russian and foreign customers.”

Rostekhnologii State Corporation was set up in November 2007 and tasked to assist Russian organizations in various industries in developing, producing and selling hi-tech products on the local and external markets, carrying out applied research in the promising technology areas, and introducing advanced technologies into production in order to raise the quality level of domestic products, cut their time-to-market and development costs.

Rosoboronexport (FSUE) was founded in 2000. It is the sole governmental agency authorized  to export/import the complete range of defence-related and dual-use products, services and technologies. In 2006 Rosoboronexport achieved a record sales index of $6,2 billion.

AVTOVAZ is one of the biggest automakers in Eastern Europe and the leader of the Russian car industry. It was founded in July 1966. Over 25 million LADA automobiles and automotive equipment sets have been built between 1970 and 2008. AVTOVAZ’ current product line-up comprises 15 car models in various configurations. In 2007 the company sold 663,500 automobiles in Russia and shipped 106,900 LADA cars to export customers.

Renault SAS and Renault-Nissan Alliance in Russia
Renault was established in Russia in 1905, created the Avtoframos company in 1998 in partnership with the City of Moscow, began production in its Moscow plant in 2005, and announced in 2007 that the plant's capacity would be doubled. Nissan's production site in Saint Petersburg is under construction. The Renault-Nissan Alliance, created in 1999, has sold 6,160,046 vehicles in 2007.

This partnership with AVTOVAZ should open new development opportunities for Renault and for the Alliance on the Russian market, as well as component sharing activities.

Troika Dialog is a leading independent investment company operating in the CIS countries’ markets. The company was set up in 1991 and its core areas of activities include securities trading, investment and banking services, trust asset management, direct and venture investments. Aside from Moscow, Troika Dialog in presented in 18 major cities in Russia, as well as in New York, London, Kiev and Cyprus.