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Exclusive: Top Russian carmaker Avtovaz planning to delist from Moscow Exchange - sources
March 27, 2017 / 10:55 AM / 4 months ago

Exclusive: Top Russian carmaker Avtovaz planning to delist from Moscow Exchange - sources

A visitor sits inside a Lada car produced by the Russian automobile maker Avtovaz at the 'AvtoGermes' dealership in Moscow, Russia, March 14, 2016. Picture taken March 14, 2016.Maxim Shemetov

MOSCOW/PARIS (Reuters) - Russia's largest carmaker Avtovaz (AVAZ.MM) is planning to delist from the Moscow Exchange after a secondary share offering later this year, two sources familiar with the matter told Reuters.

The move would allow Avtovaz, majority-owned by French car giant Renault (RENA.PA) and its alliance partner Nissan (7201.T), to take out costs relating to supporting a listing and reporting financial results after being hit by the collapse of Russia's once-booming auto industry, where annual vehicle sales have more than halved since 2012.

Both sources, who spoke on condition of anonymity to discuss confidential matters, said the purchase of a 24.1 percent stake in Avtovaz by Russian investment bank Renaissance Capital late last year was part of the delisting plan.

The sources, one close to Avtovaz's management and another person briefed by senior shareholders, declined to give further details on the bank's involvement, explain why it was needed, or say why Avtovaz management wanted to delist.

The person briefed by shareholders said the delisting had been planned since at least late 2016.

Avtovaz, Rencap and Rostec declined to comment.

A Renault spokeswoman said: "This is not on the agenda. Our focus for now is the ongoing capital restructuring of Avtovaz." The company declined further comment.

"They have no aim of being a public company. The stock market is not a means of raising capital for them at this stage," said VTB analyst Vladimir Bespalov, adding that Avtovaz's free float was around 10 percent of its shares.

"Supporting a listing also requires certain additional costs and resources, including management ones ... if the current situation allows for a squeeze out and delisting, why wait until later?"

Rencap's stake purchase in December was part of a larger recapitalization plan for loss-making Avtovaz, which has become one of the most high-profile victims of Russia's economic downturn.

The company, which produces Russia's best-selling Lada brand, reported a net loss of 44.8 billion rubles ($785.96 million) in 2016, following a record loss of 73.9 billion rubles the previous year.

Avtovaz now plans to offer investors 9.25 billion shares priced at 10.3 rubles each in a second issuing later this year.

The shares will be placed via a closed subscription with Alliance Rostec Auto B.V. (ARBV), a holding company jointly owned by Renault-Nissan and Russian state conglomerate Rostec, as a potential buyer.

The source close to Avtovaz's management said Rencap would not take part in the offering, which will dilute its stake in the carmaker. Rencap will then sell the diluted stake to ARBV, whose stake will then total more than 95 percent, obliging it to make a mandatory offer to minority shareholders.

Avtovaz's shares were up 0.2 percent at 10.22 rubles per a share by 1310 GMT, having hit a high of 10.34 earlier in the session.

Reporting by Gleb Stolyarov and Jack Stubbs in Moscow, Laurence Frost in Paris; Writing by Jack Stubbs; Editing by Katya Golubkova and Louise Heavens

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