RUSAL may use 80% of IPO proceeds to pay debt-source

* Plans 10 pct Hong Kong share placement before year-end * Benchmark for valuation to be Aluminum Corp of China Ltd By Polina Devitt MOSCOW, Oct 5 (Reuters) - Indebted Russian aluminium firm United Company RUSAL intends to use 80 percent of proceeds from a planned stock listing in Hong Kong to pay back debt, a source close to the company's shareholders said on Monday. "They plan to place 10 percent of shares in Hong Kong. Serious preparations are under way in order that this can be done by the end of the year," the source said, speaking on condition of anonymity. The source said the benchmark for UC RUSAL's valuation would be Aluminum Corp of China Ltd. UC RUSAL would not comment. The source could not say if RUSAL had signed a mandate with the placement organisers. The total debt of UC RUSAL, the world's top aluminium producer, is estimated at $16.8 billion. The company is in talks with banks on restructuring. UC RUSAL said on Sept. 18 it hoped to finalise the terms of its restructuring with creditors by the end of October. The firm has several times extended standstill deals on debt repayment pending a resolution to the restructuring. Sources told Reuters last month RUSAL expected proceeds from its share placement to be $1.5-$2.5 billion. The Aluminum Corp of China Ltd, the world's third largest aluminium producer, has a market capitalisation of $22 billion. RUSAL is majority owned by billionaire Oleg Deripaska.