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. Last Updated: 07/27/2016

AvtoVAZ Loses $136M As Sales Rise to $2.2Bln

Top carmaker AvtoVAZ said Monday that its sales rose 10 percent in 2000 to 64.2 billion rubles ($2.2 billion), but it still posted a net loss of $136 million after writing off some $248 million in debts.

At an annual meeting Saturday, minority shareholders failed to place any of their candidates on the AvtoVAZ board.

Shareholders also decided not to pay dividends for 2000 and voted down a proposal put forward by a group of minority shareholders to convert into ordinary shares their preferred shares, which haven't earned dividends in six years.

AvtoVAZ board chairman Vladimir Kadannikov said at the company's headquarters in Tolyatti on Monday that "it was earlier planned to pay dividends, however due to writing off lots of debts last year, we had to repudiate a dividends payment," Prime-Tass reported.

Most of the debts that were written off were accumulated between 1993 and 1998, and most of the companies that never paid for their cars have ceased to exist, Kadannikov said.

Kadannikov also said international auditors PricewaterhouseCoopers had been chosen to audit the automaker.

Each of the three board candidates put forward by minority shareholders got less than 3 percent of the votes, leaving the company firmly under the control of its management.

As before, nine of the new board members are managers of AvtoVAZ and the Automobile Financial Corp., or AFK, which own stakes in each other. AFK has 19.86 percent of AvtoVAZ, which has 49 percent of AFK.

The other three members are Nikolai Kosov, first deputy head of Vneshekonombank, Samara region Vice Governor Viktor Kazakov and Russ-Invest director Alexander Bychkov.

The results of the meeting surprised many observers, with one brokerage, Troika Dialog, downgrading to "sell" its recommendation for AvtoVAZ shares.

"The results of the meeting confirm our view that the company is fully controlled by the management and presents a corporate governance risk," Troika analyst Andrei Kormilitsin said.

Vasily Boyko, director of the company Your Financial Guardian and an AvtoVAZ shareholder, told Vedomosti newspaper earlier this month that a minority shareholder candidate was almost "guaranteed" to make it on the board.

The trading house Aton said it saw no reason to change its hold recommendation because "There is no reason yet to blame AvtoVAZ's management for bad corporate governance — minority shareholders just can't come to an agreement and vote together for one candidate," said Aton's Alexander Agibalov.

Agibalov said that the biggest development for AvtoVAZ will come in the middle of June, when the company is expected to finally seal the long-awaited $330 million joint venture with General Motors and the European Bank for Reconstruction and Development to make four-wheel-drive Niva's under the GM name.

Kadannikov was quoted by Interfax as saying Monday that the final paperwork for the deal would be signed sometime between June 10 and 15.

AvtoVAZ is expecting to turn a profit of $310 million in 2001. The company rolled out 252,582 units in the first four months of the year, up 8.6 percent for the same period last year.