According to foreign media reports, German luxury car manufacturer Mercedes-Benz said that Russia's proposal to nationalize the assets of foreign companies that have left due to the escalation of the situation in Russia and Ukraine could threaten the company's 2 billion euros (about $2.2 billion) of assets.
Mercedes-Benz has a car factory in the Russian town of Esipovo, 40 kilometers (about 25 miles) northwest of Moscow, with more than 1,000 employees, that produces E-Class sedans and SUVs. The plant opened in April 2019 and was attended by Russian President Vladimir Putin and said the plant would produce 25,000 cars a year with a total investment of nearly $300 million. Mercedes-Benz's Moscow plant is the first in Russia to be opened by a foreign automaker in years, and investment in Russia's once booming auto industry is on the verge of drying up due to Western sanctions and economic stagnation.
Image source: Mercedes-Benz
Mercedes-Benz said its Russian subsidiary has bank debt of about 1 billion euros, for which the company has provided global guarantees. By the end of 2021, the total value of Mercedes-Benz's Russian subsidiaries is around 2 billion euros.
In its annual report released on March 11, Mercedes-Benz said that the situation in Russia and Ukraine has triggered a series of risks, including disruptions in the supply of spare parts and energy, as well as cyberattacks. "The assets of the Russian subsidiary may be confiscated, which will exacerbate these risks," Mercedes-Benz said. ”
Last week, Russia's ruling United Russia party said a government committee had approved that a foreign company would nationalize its assets if its shareholders were from "unfriendly countries" and held more than 25 percent of the shares.
The United Russia Party said that under the proposed bill, companies that have announced leaving Russia can be denied access to the nationalization process if they resume operations or sell their shares within 5 days (provided their business and employees remain in Russia). Otherwise, the Russian court will appoint a temporary governing body for a period of 3 months, after which the shares of the new institution will be auctioned off and the old institution will be liquidated.