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. Last Updated: 07/27/2016

Ailing Plant Eyes Loan for Renault Link

The Russian car manufacturing plant Moskvich, hit severely by declining sales and financial crisis, is hoping to receive a $72 million French loan to finance the purchase of Renault engines for a planned new range of cars.

Prime Minister Viktor Chernomyrdin approved the loan proposal by Moskvich on Tuesday and instructed the Finance Ministry and Vneshekonombank to complete the paperwork necessary to secure the funding, Interfax said.

The report did not say when the French funding might be approved or when the new line of cars might appear.

Moskvich's 20,000 workers have been on paid leave since February and the struggling plant has only turned out 560 cars this year, down from 40,000 last year and far off earlier highs.

Under the conditions of the loan, the Moscow-based car manufacturer is expected to make advance payments towards the engines supply, and repay the loan with interest.

Renault signed an agreement last February to deliver 40,000 engines annually to Moskvich for a new car to be launched by the Russian plant this year, Reuters reported.

A Renault team came to Moscow in June to investigate if the cash-strapped Moskvich car plant could be used to assemble its Megane and Laguna cars.

President Boris Yeltsin recently told the government to earmark at least 100 billion rubles ($20 million) in state support to Moskvich this year, according to Interfax.