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. Last Updated: 07/27/2016

Troika Seen Taking AvtoVAZ Stake

Investment firm Troika Dialog, acting for state arms exporter Rosoboronexport, has built up a stake in struggling carmaker AvtoVAZ and proposed a plan for the state to gain full control, newspapers reported Wednesday.

AvtoVAZ, which produces the Lada, has been increasingly losing out to foreign competition and is in dire need of cash. Vedomosti quoted sources close to AvtoVAZ as saying Troika Dialog had bought 17 percent of AvtoVAZ shares and proposed turning 66.5 percent of ordinary shares owned by AvtoVAZ's subsidiaries into treasury stock.

"[The elimination of the cross-ownership structure] is being worked on," AvtoVAZ spokesman Ivan Skrylnik said. He declined to make any further comment.

Kommersant quoted a source close to AvtoVAZ as saying 48 percent of ordinary shares in AvtoVAZ held by two subsidiaries would be turned into treasury stock and annulled within one year.

The carmaker's shares rose 8 percent on the news. Analysts said the plan would reduce the number of AvtoVAZ shares outstanding, boosting the carmaker's earnings ratios.