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. Last Updated: 07/27/2016

AvtoVAZ Offers the EBRD 20% in GM Joint Venture

The head of the nation’s No.1 car maker AvtoVAZ said in an interview published Friday that his firm had offered the European Bank for Reconstruction and Development a big stake in a proposed joint venture with U.S. General Motors.

"We have offered the EBRD about 20 percent of the joint venture’s capital," Vladimir Kadannikov, chairman of AvtoVAZ’s board, told Kommersant.

The $500 million to $600 million project, originally aimed to build GM’s Opel Astra and a new version of AvtoVAZ’s Niva off-road vehicle, has been in the works for years, but to date no agreement has been reached.

Kadannikov said AvtoVAZ and the EBRD were in talks on the details of the proposal.

EBRD officials were not immediately available for comment, but a source close to talks said earlier the bank had considered extending a $170 million loan and making a $50 million equity investment in the proposed joint venture.

Kadannikov said AvtoVAZ had offered a stake of its shares to GM as collateral under a strategic partnership program, but GM has not yet made any decision.

GM has confirmed its interest in the joint venture, but wants the EBRD to share financial risks, Kadannikov said. He added that the joint venture may be registered in the first quarter next year.

GM has said its board was likely to consider the deal in February. Kadannikov also said that AvtoVAZ, which needs investments badly, could offer a strategic investor a controlling stake of up to 50 percent plus one share by means of an additional share issue.