Rusal Rejects Proposal to Exit Boguchansk Project to Cut Debt

May 18 (Bloomberg) -- United Co. Rusal, the aluminum producer controlled by Russian billionaire Oleg Deripaska, rejected a proposal from a group of banks to cede its stake in an energy and smelting project to cut debt. The company should transfer its stake in the Boguchansk joint venture to its partner OAO RusHydro, according to a May 14 letter from Barclays Capital seen by Bloomberg News. Barclays is part of the group that agreed in March 2007 to lend $520 million for the development of Boguchansk, according to the letter. “Rusal has no intention to exit Boguchansk,” Rusal spokeswoman Vera Kurochkina said today in an e-mail. “We consider the proposal presented in the letter from Barclays Capital unacceptable and reject it.” Rusal is trying to renegotiate $7.4 billion borrowed from more than 70 foreign banks after commodity prices tumbled. The closely held aluminum producer last week extended a freeze on debt repayments by a month to June 11. It has called for a review of costs at Boguchansk and the possibility of picking alternative contractors. Jon Laycock, a spokesman for Barclays in London, declined to comment on the letter. The lenders’ proposal is one of several possible solutions to the development of Boguchansk, Yevgeny Druzyaka, a RusHydro spokesman, said in an e-mail. RusHydro and Rusal haven’t discussed the proposal yet, he said. Should discussions proceed, RusHydro will offer to split the project by retaining the power plant while Rusal gets the aluminum smelter, Druzyaka said.