RusAl rushes to restructure debt as talks fail

RusAl, the world’s largest aluminium producer, is racing to complete debt restructuring plans after talks with the Libyan Investment Authority (LIA) and other sovereign wealth funds failed, The Times has learnt. RusAl — which is controlled by Oleg Deripaska, the Russian oligarch, and which is estimated to have been worth as much as $30 billion at the height of the commodities boom — has to restructure about $7.4 billion (?4.5 billion) worth of debt to foreign banks. It had been in active discussions with the Libyans about selling a 10 per cent stake in the Russian group. It is not known whether Mr Deripaska was prepared to reduce his own stake as part of a refinancing deal with Libya.However, RusAl became frustrated at the lack of progress and the slow speed at which officials in Tripoli operated and has walked away. It is also understood that talks with other sovereign wealth funds about selling a stake were abandoned. The LIA was unavailable for comment. It is not clear how Mr Deripaska and the LIA were introduced. However, Jacob Rothschild, the fourth Baron Rothschild, was until last year an adviser to the Libyan Investment Authority. His son Nathaniel — a friend of Mr Deripaska — was also on the advisory board of RusAl. A deal with Libya would have had a number of advantages apart from a much-needed injection of capital. Any deal with Tripoli would have been faster than pursuing the protracted process of preparing for a partial float on a big stock market. It could also have prepared the way for RusAl to negotiate other contracts in Libya and may have offered the Russians the opportunity of building an aluminium smelter in the North African country, exploiting its plentiful energy supply. A spokesman told The Times: “RusAl has been in contact with a number of capital providers and is considering a variety of options for capital-raising, including a possible IPO, and we are not commenting on any individual negotiations.” On top of the money that it owes foreign banks, RusAl owes about $4.5 billion to the Kremlin-controlled VEB bank and $2.1 billion to other Russian banks. Its deadline for debt restructuring had originally been September 18, a date agreed at the end of July when Mr Deripaska and the coordinating committee representing RusAl’s banks presented the restructuring proposal to 70 international lenders. On Friday, RusAl said that it had agreed another extension to the deadline for renegotiating its repayment schedule to foreign and Russian banks. The standstill agreement on debt repayment to [foreign] banks has been extended until the end of October. The company did not provide the total sum of debt. The statement explained that it expected to complete negotiations with Russian creditor banks by the end of September. It added: “By the end of October, RusAl and its lenders intend to complete all the procedures on restructuring.” It is also believed that RusAl is considering whether a stock market listing in Hong Kong would be feasible to raise new funds. It is thought that it has ditched plans to list on the London stock market and instead favoured a partial float of a 10 or 20 per cent stake in Hong Kong and Paris. Last week, Artem Volynets, RusAl’s deputy chief executive, said: “No decision has been made at this moment about the timing, venue or any of the parameters of a potential listing. We are completing the restructuring and will sign the significant final documents in the next few weeks, so [the] very logical step is equity raising to reduce our debt to levels according to the reduction schedules.”