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INTERVIEW-BasEl says 50,000 jobs cut, seeks debt deals

Tuesday, Nov 03, 2009
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* Basel says cut near 50,000 jobs since the start of crisis * Hopes to complete $20 bln debt restructuring in '09 By Kiryl Sukhotski and Polina Devitt MOSCOW, Oct 30 (Reuters) - Russian tycoon Oleg Deripaska's metals-to-timber conglomerate Basic Element (BasEL) has cut about 50,000 jobs since the crisis began last year, a company executive said, revealing the biggest layoff Russia has ever seen. Basic Element's Deputy Chief Executive Andrei Yelinson told Reuters Television on Friday that most BasEL's units began generating profits in July thanks to cost and job cuts and that he hoped to restructure the group's multi-billion dollar debt by the end of 2009. "We did employ more then 300,000 people. Now we estimate that we are still in that range with more than 250,000," Yelinson said in an interview. Russian companies are usually cautious when announcing staff cuts as the government of Vladimir Putin has made it clear it expects them to swallow losses during the downturn and limit job cuts to avoid social discontent and mass unrest. The Russian state railways said in April it might cut some 54,000 jobs but since then it said it would scale down the cuts as the macroeconomic environment was improving. The companies in which BasEl owns stakes have cumulative debts in excess of $20 billion. Earlier this month, the group told Reuters it sought to delay repayment of its units' principal loans to 2010 "The restructuring, which has been a long process we started almost a year ago, is at its final stage. We hope to complete the whole process by the year-end," Yelinson said. "We see already some of the restructuring contracts finalised like in (carmaker) GAZ group , where we're already in the process of obtaining government guaranties." In early October, GAZ agreed the restructuring with the last of its creditors, Alfa-Bank, while agreements with other creditors had been reached in summer. United Company RUSAL, the world top aluminium producer, where Deripaska owns a controlling stake, accounts for some 80 percent of BasEl's units' debt. UNITS START GENERATING PROFIT BasEl owns stakes in sectors most severely hit by the crisis including automotive, metals and property. But most of the units have already started generating profits. Yelinson said. "Many of them have already done it in July," he said. "By the year-end, specifically next year, we target all companies to become profitable. Marginally they are all profitable now. We are aiming for them to be profitable at the bottom line next year." He said that before the economic crisis BasEl's assets had been valued at over $45 billion. "If you compare it with the debt it was a reasonable ratio. When we restore the earnings potential, the debt of that level is not something that would stop us from going forward and implementing our strategy," Yelinson said. (Writing by Aleksandras Budrys; editing by Karen Foster)

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