Vekselberg Says Rusal May Sell Shares to Refinance

Jan. 30 (Bloomberg) -- United Co. Rusal may sell shares in a private placement as it seeks to refinance about $16.3 billion of debt, billionaire shareholder and company Chairman Viktor Vekselberg said. The Russian company owes $7 billion to foreign banks, about $6.5 billion to domestic lenders and about $2.8 billion to Mikhail Prokhorov’s Onexim Group, Vekselberg said today in an interview in Davos. Rusal is in “active” talks with creditors and may agree on a refinancing of bank loans within three months, he said. Vekselberg, 51, said Rusal, Russia’s largest aluminum company, will cut output as much as 10 percent and freeze investment for about three years. Oleg Deripaska, the company’s majority owner, returned as Rusal’s chief executive officer earlier this month after the lightweight metal fell to a five- year low. Profit may slump 88 percent to $476 million this year, according to ING Groep NV. Aluminum must trade at $1,700 a metric ton for Rusal to service its debt and pursue new projects, Vekselberg said. He forecast prices will reach $2,000 this year. Aluminum for delivery in three months was 1.2 percent lower at $1,350 a ton as of 12:18 p.m. on the London Metal Exchange. IPO Plan Rusal plans to repay Prokhorov in cash and Rusal shares, Vekselberg said. Russia’s government may act as guarantor for debts to local and foreign banks, he added. “Russia’s government is not looking today just to give money to business,” Vekselberg said in a separate Bloomberg Television interview. “They are trying to create the right environment. There are many instruments. One is a state guarantee for refinancing with local or foreign banks.” The turmoil in financial markets means Rusal probably won’t hold an initial public offering this year, Vekselberg said. “A private deal is possible, but it is early to talk about it,” he said. Closely held Rusal was forced to seek a $4.5 billion bailout from state-owned Vnesheconombank in October to refinance loans used to buy 25 percent of OAO Norilsk Nickel, Russia’s biggest metals and mining company. Rusal had sought a merger with the nickel company. Merger Proposals Deripaska and billionaire investors Vladimir Potanin and Alisher Usmanov this month proposed to the government separate plans to create a consolidated mining company. The merged entity would get access to state funds to repay debt. Deripaska and Usmanov urged the government to become a shareholder in the new company, which would be formed around Norilsk. Deripaska didn’t include Rusal in his merger proposal. Rusal needs to “restructure” before it can seek a merger with other metals companies, Vekselberg said. The company’s indebtedness isn’t the only reason why it’s unwilling to take part in the consolidation, he said. “Of course it’s not only because of debt. Indeed, because of the debts it would have been good to participate,” he said. “At present I don’t see the point or the industrial logic behind Rusal taking part.” Russian metals companies should merge only to enhance competitiveness and not simply to consolidate debt, Prime Minister Vladimir Putin said Jan. 27.