Russian oligarch wins aluminium debt reprieve

MOSCOW (AFP) – Russian oligarch Oleg Deripaska's heavily indebted UC Rusal aluminium giant said Friday it had won a two-month moratorium from international creditor banks to allow a debt restructuring. The announcement comes as Deripaska, who lost his status as Russia's richest man after being hit hard by the global economic crisis, tries to shift a mountain of multi-billion dollar debts in his once flourishing business empire. "UC Rusal announces that it has signed a standstill agreement in relation to the restructuring of its debt to the international lending banks," the leading aluminium and alumina producer said in a statement. "The standstill will be effective for a period of two months, with the possibility of extension for a further month," it added. The statement confirmed that Rusal's debts amount to 14 billion dollars (11 billion euros), 7.4 billion dollars of which are owed to its international creditor banks. It said that during this period the company -- which has been badly hit by falls in world aluminium prices -- would "coordinate the terms of a long-term restructuring (of debt) to the benefit of all stakeholders. "We are pleased that our lenders have endorsed our pro-active steps to address the exceptional trading conditions and the current global economic crisis," the statement quoted Deripaska as saying. Deripaska, who is UC Rusal's chief executive, is reported to have a 57 percent stake in the company. The drop in asset prices due to the financial crisis has seen Deripaska's fortune dwindle by a factor of 10 over the last year, from 40 billion dollars to 4.9 billion, the Russian business magazine Finans has reported. The statement said the debt agreement covers more than 30 transactions involving more than 70 banks. Rusal started talks with creditor banks to forge the agreement in December and has embarked on a major cost-cutting programme to trim its operations amid the global economic downturn. No mention was made in the statement of another looming issue for Deripaska -- obligations towards his successor as Russia's richest man, the tycoon Mikhail Prokhorov. Prokhorov has an option to sell his 14 percent stake in UC Rusal, which he could force Deripaska to buy for 7.3 billion dollars. UC Rusal also owes Prokhorov 2.8 billion dollars for its stake in Norilsk Nickel. In April, well before the global crisis struck, Prokhorov sold 25 percent of the world's largest palladium and nickel producer Norilsk Nickel to Deripaska who later watched as his new assets acquisition tumbled in value. His troubles are a far cry from his heyday this summer when he triggered a political scandal in Britain by entertaining top government and opposition figures on his 72-metre (236 feet) superyacht "Queen K." Norilsk Nickel has also been hit by the plunge in global metals prices while Deripaska's carmaker GAZ is struggling too. According to Russian business daily Vedomosti, his debts total 25 billion dollars. Deripaska has now taken over as chief executive of his Basic Element holding company from his long standing lieutenant Gulzhan Moldazhanova to handle the crisis on a day-to-day basis, company sources said this week.