The U.S. Treasury on Thursday extended a deadline for investors to divest from GAZ to March 7 and granted businesses a matching reprieve to wind down operations and contracts involving the firm. The deadline for both had been Jan. 21.
The announcement comes one day after the Treasury said in a statement it would lift sanctions on Deripaska's core empire, aluminum giant Rusal and its parent En+, watering down the toughest penalties imposed since Moscow's 2014 annexation of Crimea. The deal is subject to a 30-day review period.
The U.S. Treasury had imposed sanctions on Deripaska, Rusal, En+, GAZ and other companies in which he owns major stakes in April, citing "malign activities" by Russia.
On Wednesday, it said Rusal, En+ and power firm EuroSibEnergo had agreed to restructure to reduce Deripaska's stakes, adding if Congress does not object the Office of Foreign Assets Control (OFAC) would lift the sanctions in one month.
But there was no mention of GAZ, Russia's largest producer of light commercial vehicles (LCV), leaving market players guessing over its fate.
"Talks (with OFAC over GAZ) are continuing, they are separate from talks on other Deripaska's companies as this (cars) is a different market and other players are interested in sanctions being removed," one of the sources said.
GAZ exports vehicles to over 25 countries outside Russia, and at home, its stake at the LCV market is around 50 percent.
GAZ has a contract manufacturing relationship with Germany's Daimler on LCV production in Russia and Volkswagen uses GAZ facilities to produce some passenger car models in Russia.
A second source familiar with the talks said the main focus on getting sanctions lifted on GAZ was for it to mirror the shareholder changes which En+ had committed to undergo.
Under the deal with OFAC, Deripaska's stake in En+ will fall below 50 percent from 70 percent, with limited voting rights.
Two other sources familiar with the talks said the process may lead to GAZ selling some of its assets or a stake in itself, depending on how talks develop with the U.S. Treasury.
GAZ and Daimler declined to comment. Volkswagen said it was following developments closely.
"Volkswagen is in constant contact with the relevant departments for this purpose. It is crucial that we remain in a dialogue and do not slacken in our efforts to find a solution. In principle, Volkswagen AG complies with all existing sanctions," it said.
A representative for Deripaska did not reply to a request for a comment.
(Reporting by Gleb Stolyarov, Polina Devitt, Tatiana Voronova, Anastasia Lyrchikova and Katya Golubkova in MOSCOW; Lesley Wroughton and Roberta Rampton in WASHINGTON; Laurence Frost in PARIS and Arno Schuetze in FRANKFURT; Editing by David Evans and Sonya Hepinstall)
By Katya Golubkova and Gleb Stolyarov