GAZ Group Receives RUR 20 bln in State Guarantees
OREANDA-NEWS. July 10, 2009. A high-level review of the successful steps taken by GAZ Group to bring its financial problems under control resulted yesterday in a vote in confidence in its long-term future.
The review, chaired by Russian Federation First Vice President Shuvalov, agreed to provide stavte guarantees worth 20 billion rubles to enable GAZ’s loans to be restructured by its banks.
These guarantees will allow GAZ Group breathing space to repay its loans without the need for direct state financial support.
The decision came after the commission heard that GAZ’s key Gorky Avtozavod division stopped making losses last month – and that the break even point would be reached for the entire Group later this year.
The measures the Group has put in place have already reduced administrative costs by 44% and helped increase monthly revenues by 1.5 times compared to January 2009.
The Commission also heard from the Governors of the Yaroslavl and Nizhny Novgorod Region, where GAZ have plants, of the progress that had been made.
They reported that the region’s plants are now operating without stoppages, wages were being paid promptly and payments to the regional and federal authorities are being met in full.
Governor Vakhrukov, of the Yaroslavl Region, also praised the way GAZ Group was keeping its sights on the long-term future of the company. Despite the current financial problems brought on by the global crash in demand for vehicles, he said GAZ Group recognized the need to continue modernizing its plants and the “clear plan of action aimed at keeping jobs and retraining their employees.
GAZ Group has met the performance targets of its anti-crisis program without direct financial help from the Russian Federation. While state guarantees will help back unsecured loans, the Group intends to fulfill all their financial liabilities and commitments independently.
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