(Reuters) -Renault is to sell its majority stake in carmaker Avtovaz to a Russian science institute reportedly for just one rouble with a six-year option to buy it back, leaving the door open for the French carmaker's return.
Moscow Mayor Sergei Sobyanin said that in order to preserve thousands of jobs, Renault (EPA:RENA)'s plant in the city would be used to restart production of the Soviet-era Moskvich brand.
Renault, the Western carmaker most exposed to the Russian market, said on Monday that its holding of nearly 67.69% in Avtovaz would be sold to the Russian Central Research and Development Automobile and Engine Institute, called Nami.
"The closing of these transactions is not subject to any conditions, and all required approvals have been obtained," it added.
Two sources familiar with the situation told Reuters that Renault Russia and the Avtovaz stake were sold for a symbolic one rouble ($0.016) each. The company's 100% stake in Renault Russia will go to the city of Moscow.
Renault had valued its Russian assets at 2.2 billion euros ($2.29 billion) last year.
"Today, we have taken a difficult but necessary decision, and we are making a responsible choice towards our 45,000 employees in Russia," the carmaker's CEO, Luca de Meo, said.
The move preserved the group's performance and its ability to return to the country in the future in a different context, he added.
The Avtovaz factory at Togliatti may also make Renault Duster cars under the Lada brand, Denis Pak, head of the car industry department at the Industry and Trade Ministry, said in a televised interview with Rossiya-24.
He said an agreement was reached with Renault.
Renault was not immediately available to comment.
De Meo has been clear about the French carmaker's desire to return to Russia after the war in Ukraine is resolved and normal relations are eventually restored.
The iconic Moskvich, which translates as a native of Moscow, ceased production around two decades ago.
But Sobyanin, the mayor, said Moscow was working with truck maker Kamaz Inc and Russia's Industry and Trade Ministry to localise as much vehicle component production in Russia as possible.
Pak said Moskvich production was expected to start this year. The Moscow plant will be renamed Moscow Automobile Factory Moskvich, he said.
Renault said in March that it would suspend operations at the Moscow plant amid mounting pressure over its continued presence there since the start of the conflict in Ukraine.
Renault, which is 15% owned by the French state, confirmed a non-cash writedown of nearly 2.2 billion to reflect the potential costs of suspending Russian operations.
More than 400 companies have withdrawn from Russia since it invaded Ukraine on Feb. 24, leaving behind assets worth billions of dollars.
Russia calls its actions a "special operation" to disarm Ukraine and protect it from fascists. Ukraine and the West say the fascist accusation is baseless and the war is an unprovoked act of aggression.
($1 = 63.8370 roubles)
($1 = 0.9593 euros)