Ukraine no longer backs only GM as AvtoZAZ partner

10/28/96

Reuters reports that the Ukraine has reversed a decision to support General Motors as the sole potential partner for AT AvtoZAZ. Instead the country has decided to go ahead with an open investment tender for the state-owned carmaker.

Ukraine's Prime Minister Pavlo Lazarenko issued a one-sentence decree last week, saying only that the government had rescinded its earlier decree, which said it would back only GM.

Viktor Padalka, head of the machine-building section for Ukraine's Cabinet of Ministers said the decision meant "that the competition for investment tender will go ahead.

In September GM and AvtoZAZ agreed to conduct a $500,000 feasibility study investigating the possibility of joint car and light truck manufacture. The study was supposed to have ended by the end of the year.

AvtoZAZ currently manufactures a mid-range car dubbed the Tavria in the eastern industrial city of Zaporizhiya. The company is one of 208 state enterprises that the State Property Fund (FDM) has made available for strategic investment. FDM is an agency established to help the state privatize its interests. The Fund valued the carmaker's authorized capital at $5.32 million, and planned to make 30 percent of the company available for strategic foreign or domestic investment. Other companies, like Korea's Daewoo Group, have also expressed interest in AvtoZAZ.

Paul Dever -- The Auto Channel