French automaker Renault has signed a deal to rescue its struggling Russian partner Avtovaz with €240 million in new investments, the company said in a statement.

"The Avtovaz shareholders have agreed measures to ensure the sustainability of the company through debt restructuring, a new product plan and investment plan," the French company said.

The firm signed the deal with Avtovaz's other main shareholders, Troika Dialog and Russian Technologies, during a visit to Paris by Russian Prime Minister Vladimir Putin, who had previously called for more French investment.

Under the deal, the Russian state will increase its support for Avtovaz -maker of the iconic Lada - from 25 billion to 75 billion roubles (€1.67 billion) in order to clear the debts and ensure short term liquidity.

Renault's smaller contribution will be in the form of technology transfers, machine tools, equipment and know-how to allow Lada to renew its product line, working with its existing Japanese partner Nissan.

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