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EricVan

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EricVan

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Monday, 11/12/2007 1:32:34 PM

Monday, November 12, 2007 1:32:34 PM

Post# of 8469
Here's a nice read related to DMTN IMO

Magna Signs Agreement to Build Car Factory in Russia (Update3)

By Hugo Miller and Lyubov Pronina

Nov. 12 (Bloomberg) -- Magna International Inc., the Canadian vehicle-parts maker that also assembles autos, will build a car factory in Russia to profit from surging domestic demand, the Russian government said.

Magna signed a preliminary agreement with the country's Economy Ministry, an official said by phone in Moscow today, declining to give his name because of ministry rules. Tracy Fuerst, a spokeswoman for Aurora, Ontario-based Magna, wouldn't confirm the expansion, calling it speculation.

``We know about this project,'' said Alexander Filatov, strategy director for Russian Machines, an aircraft and car manufacturer, in a roundtable interview in Moscow today. Russian Machines has a separate venture with Magna.

Magna, which assembles Bayerische Motoren Werke AG's X3 sport-utility vehicle in Austria, is expanding in the fast- growing Russian car market as declining U.S. auto sales crimp demand for parts in North America.

Shares of Magna rose C$1.92, or 2.3 percent, to C$87.02 at 12:02 p.m. in Toronto Stock Exchange trading.

``There is a potential role for Russian Machines and GAZ,'' Filatov said, referring to Russian Machines' OAO GAZ carmaking unit. The agreement Magna has signed with the Economy Ministry is ``a 100 percent Magna project'' and separate from the May deal struck between the Canadian company and Russian Machines, he said.

It is really an ``operational matter'' for Magna, he said declining to comment further. Russian Machines is a unit of Basic Element, the holding company of Russian billionaire Oleg Deripaska, who has a fortune estimated by Forbes this year at $13.3 billion.

Deripaska agreed in May to spend $1.5 billion for a stake in Magna, giving the Canadian company access to the Russian car market in return for help in overhauling the GAZ business. As part of the agreement, Deripaska acquired 20 million Class A Magna shares and the right to appoint six of 14 board members of a new company that controls Magna.

-- With reporting by Mike Ramsey in Detroit. Editor: Cook (emr/tel/dsv).

To contact the reporters on this story: Lyubov Pronina in Moscow at lpronina@bloomberg.net ; Hugo Miller in Moscow at hugomiller@bloomberg.net



http://www.bloomberg.com/apps/news?pid=20601082&sid=a_Kjel_VVGLE&refer=canada

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