“AvtoVAZ” suspended the operating risk of the business because of losses and debts

MOSCOW, 12 February. The largest Russian car manufacturer AVTOVAZ group has the risk of delay operating activities due to large losses and complexities associated with the repayment of debt. It is reported by the automaker in its report and confirmed by an independent auditor.

Auditor ( Ernst&Young) notes that the loss of AVTOVAZ in the amount 73,85 billion by the end of 2015, as well as short-term liabilities exceeded the year-end current assets to 67,78 billion rubles, which causes the auditor doubts ability of AVTOVAZ to continue operating as a going concern.

According to the results of last year AVTOVAZ increased its loss in accordance with IFRS is almost three times, to 73,85 billion.

The company noted in the report that violated the covenants (restrictions) on several loans totaling in 36,58 billion.

“AvtoVAZ” also States the risks of operating activities and expects support from shareholders.

“Without the support of our shareholders, aimed at refinancing the debt obligations of the group and provision of loans, financial and market conditions give rise to substantial uncertainty, which causes significant doubt about the group’s ability to continue its operations continuously, and, thus, the group may be unable to realize its assets and commitments in the ordinary course of business”, – the report says.

At the end of the year long-term liabilities of the group amounted to 48.9 billion rubles, while they increased in comparison with 2014 year by 67%.

“As of December 31, the company had not complied with financial covenants established by credit agreements with banks, including the coefficients of financial leverage, EBITDA, profitability and liquidity. As at 31 December 2015, the company’s debt on Bank loans, which were not fulfilled covenants, was $ 36,58 billion rubles,” – said in statements.

The Bank, Garanti Bank-Moscow and Societe Generale, which are the group’s creditors, guaranteed a refusal to claim early repayment of the debt.