AvtoVaz sets bond issue in bid to avert bankruptcy

Troubled Russian car maker OAO AvtoVAZ, part-owned by France’s Renault SA, said it plans to issue convertible bonds valued at 50 billion rubles ($1.7 billion) to repay debt, adding that it won’t rule out filing for bankruptcy if its efforts fail.

If it succeeds in refinancing its debt to Russian state-controlled banks through the bond issue, for which it wants government backing, AvtoVAZ will seek to borrow at market rates to finance an investment program through 2014, Chief Financial Officer Oleg Lobanov said Monday. Otherwise, it is prepared to consider restructuring its debt to state-controlled banks, including OAO Sberbank and OAO Bank VTB, he said.

The unprofitable car maker, based in the Russian city of Togliatti, has been cutting its bloated work force to cope with a slowdown in demand. Chief Executive Igor Komarov aims to reduce the work force, which totaled 102,000 on July 1, to 90,000 by Dec. 1 and about 80,000 by 2012. AvtoVAZ’s plant made eight cars an employee in 2008, compared with 28 cars an employee at Renault’s Moscow Factory.

Renault bought a 25% stake in AvtoVAZ last year with the goal of helping to modernize the ailing car maker, still best known for its boxy, outdated Lada sedan. The Lada brand accounted for almost a quarter of the cars sold in Russia last year, but demand has fallen by more than half as an economic downturn has boosted unemployment and reduced bank lending.

To cope, AvtoVAZ has been cutting production and worker hours. Average salaries have been dropping as a result, persuading some employees to leave of their own accord, said Vladimir Novikov, deputy head of assembly-line personnel.

The Wall Street Journal October 2009

Translate the text into Russian: № 4

CfOs Gloomy About 2010, Survey Finds The quarterly Duke University-cfo magazine survey finds finance chiefs glum on prospects for 2010, expecting further job cuts

A week ago the news on the economy was upbeat, with consumer sentiment remarkably higher in one measure. Today, some CFOs are throwing cold water on that good news.

The quarterly survey of chief financial officers conducted by Duke University and CFO magazine shows the country's climb back to health is expected to be slow. For workers out of a job, they give little hope for a rebound in 2010.

The broad findings are that while the worst is likely behind us, and many companies plan to boost their capital investments in 2010, that won't translate to more jobs or improvements for workers. U.S. executives expect to reduce their domestic workforce by 1.6% next year. In Europe, CFOs are expecting a 2.6% headcount reduction. Few think they'll be back to pre-recession staffing levels before 2011, or later. Those who have cut wages and other benefits to weather the storm don't expect to restore them in the coming year, either.

CFOs don't relish further staffing reductions. Nearly half of the U.S. executives said they have made cuts that they expect will do permanent damage to their long-term prospects, the most damaging of all being deep reductions in their workforce. Coming in second were cuts to training and professional development. Across the board, American CFOs were more pessimistic than finance executives outside the U.S., though their moods have improved slightly since last quarter. They predict an earnings rise of more than 7% and for capital spending to rise 2%, an improvement over recent predictions but still well below historical norms.

Small-company CFOs have the least access to capital, according to the report, though they are the ones who told the survey they'll hire next year. Firms with more than $1 billion in sales will be cutting jobs.

Business Week December 2009

Translate the text into Russian: № 5

Orders Probably Picked Up With Spending

Manufacturers in the U.S. probably received more orders for durable goods in February and consumer purchases climbed the most in five months, economists said reports this week will show.

Bookings for long-lasting factory goods rose 3 percent last month after decreasing 3.7 percent in January. Personal spending increased 0.6 percent last month, boosted in part by stronger auto sales.

“It’s employment that’s really driving the bus for spending growth right now,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit. “As our economy expands, it’s going to allow manufacturing to build right along with it.”

Six months of the strongest job growth since 2006 is helping sustain incomes and spending, just as companies upgrade equipment, keeping the nation’s producers at the forefront of the almost three-year-old expansion. At the same time, higher transportation costs and slowdowns in Europe and China represent hurdles for manufacturing.

The Commerce Department’s report on March 28 is projected to show orders for goods meant to last at least three years climbed for the fourth time in five months, helped by a jump in demand for commercial aircraft. Boeing Co. received orders for 237 airplanes in February from 150 a month earlier.

Auto manufacturing has been powering factory growth. Cars last month sold at the fastest pace in four years, led by Chrysler Group LLC and a surprise gain from General Motors Co. Light-vehicle sales accelerated to a 15 million annual rate, the strongest since February 2008.

Federal Reserve officials said this month that consumer and business spending are helping drive the world’s largest economy.