Russia could get minority stake in RUSAL: CEO

DAVOS, Switzerland (Reuters) - Russia could get a minority stake in the world's biggest aluminum producer via issuance of a convertible bond but the state is not actively pursuing such a stake, United Company RUSAL Chief Executive Oleg Deripaska said. Deripaska, Russia's richest man last year, has been forced by the deepening global financial crisis to turn to the state for help in refinancing billions of dollars in foreign debt. The fate of Deripaska, who controls one of the country's most powerful industrial groups, is being closely watched by investors for indications of future Kremlin economic policy. Deripaska declined to give details about UC RUSAL's debt but said discussions were continuing with banks about restructuring and that news on the issue would be announced in under a month. Asked if the state could take a minority stake in UC RUSAL, he said: "It will be much more clear at the end of February. We discussed it because we borrowed from Vneshekonombank (VEB) and we now discuss what will be the long-term instrument." "We may have an instrument which will connect the state to RUSAL like a convertible bond," he said. "But this is not about the state being eager to get a stake in RUSAL. They are actually not." Deripaska's comments to reporters on Saturday were embargoed until Sunday. Later on Sunday, he issued a statement saying: "We continue to discuss the conversion of part of our debt into long-term financial instruments, and then conversion into RUSAL shares depending on the improvement in the financial situation and the wishes of the main creditors and the government." UC RUSAL pledged to conduct an initial public offering (IPO) within three years of its formation in March 2007, when Deripaska's RUSAL merged with smaller domestic rival SUAL and assets belonging to global commodities trader Glencore. Deripaska said the company still had plans for an IPO, but he declined to answer questions on media speculation that he might have to buy out other shareholders if the IPO did not take place by a certain date. "We still have our IPO program but it was never decided whether it would be the LSE (London Stock Exchange) or any other exchange," he said. He said in the later statement: "We are examining two potential locations for the listing: Europe and Asia." Some of Russia's richest men, who borrowed billions of dollars in the boom years under former President Vladimir Putin, have been badly hit by the economic crisis as the value of collateral they put up as security for major loans plummeted. Senior Russian officials and businessmen, including Deripaska, have held discussions on merging Norilsk Nickel (GMKN.MM), the world's top producer of nickel and palladium, with several large metals and mining companies. UC RUSAL holds a one-quarter stake in Norilsk. But Deripaska, who put this stake up as collateral on a $4.5 billion loan from state corporation VEB, said UC RUSAL itself would not take part in any such mega-merger. "First we need to restructure our debt, which is the most important thing for us," he said. "I can't see the synergy. What is the synergy? You put a chicken and a duck together and you expect what? That it will fly or swim? We are not considering this for RUSAL, and that is the position of the shareholders." Deripaska, who flourished in the chaotic post-Soviet commodity trading world, said Russia was mainly concerned with stabilizing supply and prices, and making sure there was no social upheaval in regions where metals companies operate. He said many different ideas had been tabled on the merger, including those from iron and steel firm Metalloinvest, co-owned by billionaire Alisher Usmanov, and Interros, the investment vehicle of Norilsk Nickel shareholder Vladimir Potanin. But he said a deal was still far off. "This is a very complex deal and you can't see any progress soon. There are a lot of public companies involved," he said. "The government is very worried about the debt levels. They want to see first social solutions for this debt level in the industry, which every company has for its own reasons." He said the government would seek to complete any merger based on fair valuations for shareholders. "I am 100 percent sure, and it is our position as a blocking shareholder (in Norilsk Nickel), that we will support only an open approach and there should be an independent valuation. "And it should be a proper company and not just a so-called mass grave," he said with a mischievous smile. A spokesman said the phrase meant the merger should be beneficial to all. Deripaska did not name other companies involved. Russian media have reported steel makers Evraz Group (HK1q.L) and Mechel (MTL.N), plus potash miner Uralkali (URKA.MM), as potential candidates for a large corporation part-owned by the Kremlin. When asked if he would be able to pay back the debt to VEB, and thus prevent the 25 percent stake in Norilsk that was used as collateral from reverting to the state bank, he said there were "various options." But he said that he didn't think the state wanted to take the Norilsk stake. "I don't think so, because if they want it they could have taken it in November 2008. We discussed with them honestly and they weren't interested."