AvtoVAZ, Aziya Avto and EDB Signed Co-operation Agreement
Boris Alyoshin, President of AvtoVAZ, Anatoly Balushkin, Chairman of the Board of Directors of Aziya Avto, and Igor Finogenov, Chairman of the EDB Executive Board, signed a Co-operation Agreement in Akobe, Kazakhstan.
This Agreement provides for long-term co-operation in assembly and distribution of the Lada cars. The parties agreed that AvtoVAZ, acting in accordance with resolutions of its executive bodies and the current law of the Russian Federation, will acquire a 25% + one share block in Aziya Avto which will be issued additionally. The Agreement is made for ten years.
During the term of the Agreement, AvtoVAZ will grant Aziya Avto the exclusive right to assemble the Lada (up to 120,000 cars annually) and distribute them in Kazakhstan. Distribution of the Lada in Russia or other countries will be subject to special agreements with AvtoVAZ. AvtoVAZ will also assume responsibility for technical support and guarantee and after-guarantee repairs of the Kazakh-made Lada.
The Agreement provides for a full assembly cycle, including presswork, welding and painting. The cars will be assembled using sets and components supplied by AvtoVAZ or other manufacturers approved by it. The parties agreed that, to ensure that assembly needs are satisfied at all times, the production of various components will be developed within a distance of 200 km from the location of assembly facilities.
In accordance with the terms of the Agreement, the EDB will arrange for the financing of the assembly and production of components.
Troika Dialog Investment Company was selected as financial consultant for AvtoVAZ under this project.
Kazakhstan is a major export market for AvtoVAZ. In 2007, this country received 14,690 Lada cars – a 26% increase compared with 2006. AvtoVAZ supplies to Kazakhstan all models from the Lada series. The Lada fleet in Kazakhstan exceeds 820,000 units, which accounts for nearly 50% of the country’s total car fleet. AvtoVAZ service and distribution network comprises more than twenty dealers throughout Kazakhstan.