UPDATE 1-Russia invites Renault to up stake in AvtoVAZ

TOGLIATTI, Russia, Nov 10 (Reuters) - Russia's government would consider any offer from Renault to increase its 25 percent stake in car maker AvtoVAZ, Deputy Prime Minister Igor Shuvalov said on Tuesday. Shuvalov said that the Lada maker's debt restructuring depended on Renault but ruled out swapping AvtoVAZ debt for new shares in the company. "The government is ready to consider Renault offers regarding increasing its stake in the company. But there is no such offer as yet," Shuvalov told reporters in AvtoVAZ' base town of Togliatti, on the banks of the Volga river. AvtoVAZ is mired in heavy losses following a collapse in Russian car sales in the first half of this year, while staring down a 59.9 billion rouble ($2.08 billion) debt-pile, most which is repayable in the short term. The carmaker employs nearly 100,000 workers in Togliatti and the government fears social unrest if there are major job losses as alternative employment opportunities are scarce in the town. RENAULT POTENTIAL Shuvalov said the government hoped to present a rescue strategy for AvtoVAZ on Nov. 20, but needed to know Renault's position before it could finalise its plans. "Active work to clear AvtoVAZ debt and maintain AvtoVAZ (as a going concern) -- including social concerns -- should be linked to a consideration of Renault's potential as an investor," Shuvalov said. He added there were no plans for a debt for equity swap -- which would diluted the Renault stake -- saying there was little point in banks owning shares in a car company. Renault has so far avoided any commitment to increase its stake in AvtoVAZ, which it bought for around $1 billion in the winter of 2007/08. Chief Executive Carlos Ghosn said last week he had no plans to raise or reduce the stake. Russia's hopes that overseas manufacturers would help revive the car industry were dealt a blow last week when General Motors scrapped the sale of its European arm to a consortium including Russia's Sberbank. ($1=28.84 Rouble) (Reporting by Gleb Bryanski; writing by John Bowker; editing by Karen Foster) Keywords: AVTOVAZ/ ([e-mail], [phone], Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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