WARSAW -- Ukraine's AvtoZAZ on Monday signed a preliminary deal to buy a 20 percent stake in ailing carmaker FSO from the Polish government, gaining a foothold in the European Union's largest new member. "The final deal should be signed by the end of June," said Treasury spokesman Janusz Kwiatkowski.
The deal needs to be approved by the entire government and is subject to approval by the anti-monopoly office and the interior ministry, he added.
Privately held AvtoZAZ, which imports to Ukraine the bulk of FSO's output based on Daewoo's Lanos model, has already bought part of the Polish company's debt from several local banks. Warsaw-based FSO was sold to South Korea's Daewoo Motors in mid-1990s but was left out of a deal under which General Motors took over the bankrupt Korean firm's operations.
Last year FSO made 43,000 budget Lanos and Matiz models under licence from Daewoo -- around a third of its current capacity and a fifth of its all-time record production of 200,000 in 1999.
Ukraine borders three of the Central European countries that joined the European Union this year, and several of its companies have sought to gain a foothold inside the trading bloc by buying local companies.