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Vneshtorgbank fully placed the third issue of AVTOVAZ JSC bonds worth RUR 5 bln

29 June 2005

On June 28, 2005, the third issue of AVTOVAZ JSC bonds was fully placed at par of RUR 5 billion.

The issue was placed on MICEX through an open subscription, with the first coupon rate set by an auction.

The auction saw 107 bids for the total amount of RUR6,170.6 million. Investors offered first coupon rate of 8.50% to 10.00% p.a., with the most bids ranging between 9.60% to 9.77% p.a.

The first coupon rate set by the Issuer reached 9.70 % p.a. (or RUR48.37 per each bond); the second coupon shall equal the first one, with the remaining coupons to be determined by the Issuer. The issue terms provide for a put option at 100% of par due on June 29, 2006.

The effective yield to the 1-year put option amounted to 9.94% p.a.

During the auction, 90 bids of investors for the sum of RUR 4,984.7 million were satisfied, with the total amount of the issue being placed at launch.

Vneshtorgbank is arranger and underwriter of the issue.

Among leading underwriters of the issue are Bank ZENIT, International Moscow Bank, NOMOS-BANK, SOYUZ Bank, Web-invest bank, and Raiffeisenbank Austria.

Co-underwriters of the placement are Alfa-Bank, MDM-Bank, Svyaz-Bank, Evrofinance Mosnarbank, REGION Brokerage Company, URALSIB Financial Corporation, BARS Commercial Bank, VIZAVI Commercial Bank, VIP-BANK, Gazenergoprombank, Impexbank, Moscow Bank for Reconstruction and Development, Moscommertsbank, Transportny Commercial Bank and Khanti-Mansyisky Bank.

AVTOVAS documentary interest bonds are issued to bearer with its nominal value totaling RUR 5 billion. The issue was registered by the Federal Financial Markets Service on May 24, 2005, under State Registration No.4-03-00002-A. Maturing in 1820 days (or 5 years), the bonds have ten semiannual coupons. The first and second coupon rates are equal and are auctioned at placement. Other coupons’ rates are to be defined by the Issuer. Bondholders are entitled by the Issuer to an early redemption at par in a year – on the second day of the third coupon period.

Financial advisory services to the issue are provided by the Federal Stock Corporation. The NDC acts as a depository and paying agent.

Further information about the issue structure and financial position of the Issuer can be found in issue documents and information memorandum placed on the web-sites of the Issuer ( and Vneshtorgbank (

AVTOVAZ JSC plans to channel the bond placement proceeds into technical overhaul of the KALINA car production and to replace other short and costly borrowings.

For reference: AVTOVAZ JSC is a leading car builder of Russia. Since its inception, is has produced more than 22 million cars. Its LADA car make accounts for half of the Russian car park.

AVTOVAS is a city-forming enterprise of Tolyatty and is the largest employer and taxpayer of the Samara region.

AVTOVAS sales proceeds for 2004 exceeded RUR125 billion, its net profit reached RUR5.6 billion. The company’s assets approximated RUR109 billion as at the end of 2004.

Debt burden of AVTOVAZ is moderate, with the debt to capital ration reaching 43% and most of the debt being of long-term character. Moreover, annual sales profit is 7 times as large as the total interest expenses of the company, and the proceeds are 6.5 times more than the debt amount.

No other Russia car builder can match AVTOVAZ JSC in terms of high profitability and low debt burden.

AVTOVAZ JSC actively cooperates with the leaders of global car industry. In June 2001, ABTOBAZ JSC and General Motors signed an agreement on setting a joint venture to produce Chevrolet-NIVA and Chevrolet-VIVA car makes which fall under classes «SUV» and «C», correspondingly.

In 2004, the volume of Chevrolet-NIVA sales in Russia reached 54 thousand, which is much more than that of any other foreign car.

Together with car complexes, including those made for GM-Avtovaz joint venture, AVTOVAZ JSC produces more than 1 million cars last year.

Sales of LADA car make produced by AVTOVAZ JSC approximated 626 units in 2004 accounting for a 42% market share. With LADA cars produced by other car builders added, and together with Chevrolet-NIVA sales results, AVTOVAZ’ market share reached almost 50% in 2004.

In 2005, AVTOVAZ launched a new product line of “B” class – KALINA car make. The cost of its base variant will be about US$7.5-8 thousand, including one safety cushion, front window raisers and back view mirrors, both electrically driven. Total amount of investment into the project will reach US$600 million, with the sales turnover approaching 22 thousand cars, including export supplies, by 2008.

Starting from 2006, LADA 110 car make will be replaced by LADA PRIORA which will be a most technologically advanced Russian car meeting all European safety requirements.

AVTOVAZ JSC is a company with a clear-cut strategy; its mission is to provide quality vehicles to Russian people at prices they can afford, to ensure sustained gains to its shareholders, to enhance the welfare of its personnel and to add value to its business for the prosperity of the Fatherland.

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