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. Last Updated: 07/27/2016

$100M Invested in AvtoVAZ

Carmaker AvtoVAZ is set to get new equipment worth $100 million in a series of contracts arranged by state arms trader Rosoboronexport, a spokesman said Wednesday.

Under the 50 contracts from Rosoboronexport, which controls AvtoVAZ, the carmaker will get $100 million worth of foreign equipment to overhaul its aging factory, AvtoVAZ spokesman Ivan Skrylnik said. The deal will include Rosoboronexport-guaranteed loans, leasing schemes and direct purchases, Skrylnik said. This is common practice for the arms trader, which usually charges 5 percent to 7 percent in brokerage fees, said Ruslan Pukhov, director of the Center for the Analysis of Strategies and Technologies, a defense think tank.

It was not immediately clear whether Rosoboronexport would make money on the AvtoVAZ contracts.

Skrylnik, a former Rosoboronexport employee, said the arms trader would possibly charge a fee. "This is business. Rosoboronexport acts as an agent," he said. Pukhov suggested that the trader could make an exception for AvtoVAZ and negotiate good terms for the Tolyatti-based company using its good connections with the Kremlin.

Kirill Chuiko, an automotive analyst with UralSib, said it "did not make sense for Rosoboronexport to milk AvtoVAZ" amid grand talk of turning around the ailing carmaker.

Chuiko estimated AvtoVAZ's total debt currently stood at $760 million.

On the bright side, according to preliminary data posted by AvtoVAZ on Tuesday, net profit was 2.71 billion rubles ($100.6 million) in the first six months of 2006, 4.8 percent up on the same period last year.