Rusal to Agree Debt Deal With Lenders Within 2 Months

Feb. 10 (Bloomberg) -- United Co. Rusal, Russia’s biggest aluminum producer, aims to agree on restructuring its debt with lenders in the next two months and called on competitors to curb output to shrink record inventories and halt a slump in prices. Rusal needs to refinance $16.3 billion of debt owed to Russian and foreign lenders as well as one of its shareholders, said billionaire owner and Chairman Viktor Vekselberg on Jan. 30. Aluminum prices have dropped 7 percent this year, adding to a 36 percent decline in 2008, and stockpiles in warehouses monitored by the London Metal Exchange are at a record high. “We are in intensive talks with our lenders, both Russian and international,” Artem Volynets, head of corporate strategy, said today in an interview with RBC Television. Rusal is looking at “all” financing options, including bonds, Volynets said. Rusal’s Bratsk aluminum smelter asked Russia’s markets watchdog this week to approve the sale of 60 billion rubles ($1.65 billion) in bonds. Closely held Rusal also plans to save $1.3 billion in 2009 by slashing costs in half. The company is curtailing management expenses by 60 percent from February, cutting 5 percent of its workforce and freezing new hiring. Production cuts of as much as 6 million metric tons, or 15 percent of 2008 global output, by companies worldwide are “clearly insufficient,” Volynets said. “There must be additional cuts to balance demand and supply levels.” Demand will probably recover in two to three years, he said. Rusal announced a plan on Feb. 5 to cut aluminum output 11 percent and alumina 30 percent. Alcoa Inc., Rio Tinto Group and Norsk Hydro ASA are also reducing production. To contact the reporter on this story: Maria Kolesnikova in Moscow at mkolesnikova@bloomberg.net