UPDATE 1-Russia's RUSAL makes headway on $7.3 bln debt

* RUSAL says agrees terms with co-ordinating committee * To repay $5 bln in debt by end of 2013 * Remaining debt can be refinanced for another three years * Banking source says not all banks have agreed * Restructuring deadline extended until Sept. 18 (Adds UC RUSAL statement, details, background) By Christopher Mangham and Oksana Kobzeva MOSCOW/LONDON, July 30 (Reuters) - Russian magnate Oleg Deripaska's aluminium firm RUSAL has yet to convince some banks to accept restructuring terms on $7.3 billion in debts after winning support to extended the deadline for talks to Sept. 18. United Company RUSAL, the world's largest aluminium maker, issued a statement on Thursday saying it had agreed on key terms with the co-ordinating committee of lenders, promising to repay $5 billion by the end of 2013 and to refinance its remaining debt for an additional three years. But many of the 70 banks involved in the talks are not on the committee and saw the draft proposal for the first time only a day before meeting in Paris on Wednesday evening, a banking source told Reuters. "There are a sizeable number of banks who remain to be convinced and that will be the work of the next days and weeks," the source said. "Reaction to this was mixed." Foreign banks view a successful conclusion to restructuring talks with UC RUSAL as a gauge of Russia's ability to manage $475 billion in foreign debt accrued before markets crashed in the second half of 2008. Deripaska's fortune, the biggest in Russia a year ago, has been shredded by the sharp decline in commodity prices that left the country's once-mighty billionaires badly exposed to loans taken out when markets peaked. Deripaska called the agreement with the co-ordinating committee a "landmark restructuring" and his company said it expected to settle its debt to international banks within seven years. UC RUSAL said principal repayment would be on a "pay-if-you-can" basis for the first four years. Interest will be paid partly in cash at rates ranging from 1.75 to 3.5 basis points over LIBOR, with the remaining portion to be capitalised. "In order to preserve cash for lenders and the business, no dividends will be paid until such a time that net debt to EBITDA reaches three times," the company said in the statement. Two other sources with knowledge of the Paris meeting said the proposal had received a positive reception among creditors, but they said more paperwork was required to finalise a deal. The deal announced by UC RUSAL is subject to approval by the company's international lenders and final legal documentation. UC RUSAL, with debts totalling $16.8 billion, suffered when aluminium more than halved in value between July's record high of $3,380 a tonne and the end of 2008. The company had borrowed heavily to finance acquisitions abroad and build several new smelters in its Siberian heartland. It also spent $4.5 billion on a one-quarter stake in Norilsk Nickel (GMKN.MM: Quote, Profile, Research) in a deal trumpeted at the time as a precursor to a full merger between Russia's two largest non-ferrous metals companies. This stake has since been offered as collateral against a loan from state bank VEB that allowed RUSAL to pay off foreign lenders. Creditor bank sources told Reuters on Tuesday the proposed deal with UC RUSAL obliges the aluminium company to sell its stake in Norilsk to cover debts to state banks. The sale would be triggered by a price formula. UC RUSAL said in comments emailed to Reuters that the deal contained no "strict conditions" to sell the Norilsk stake. In its statement, the company said it expected to reach an agreement with its Russian lenders "in the coming months". (Additional reporting by Melissa Akin, Polina Devitt and Aleksandras Budrys; writing by Robin Paxton; editing by Karen Foster)