Rusal Agrees Foreign Debt Changes With 50% of Lenders (Update1)

Oct. 26 (Bloomberg) -- United Co. Rusal, the biggest aluminum producer, said banks holding half its foreign debt approved a restructuring of the company’s borrowings. Moscow-based Rusal will meet foreign creditors, who hold a total of $7.4 billion of the company’s debt, after agreeing new terms with Russian banks and shareholder Onexim Group, said Oleg Mukhamedshin, head of capital markets, on a conference call. Rusal, which is seeking an initial public offering in Hong Kong, might extend a deadline to agree repayment terms with foreign banks for a fifth time should an accord on key terms not be reached by Oct. 28, four people familiar with the matter said last month. The company in March persuaded the lenders to allow it to freeze repayments after metal demand and prices slumped. The producer said July 30 it had agreed on key terms of a debt restructuring with a coordinating committee of eight banks representing the interests of foreign creditors. Each of the banks still needed to approve the terms internally before an accord could be formally signed. “Banks whose credit committees have not yet approved the key restructuring terms will do so” after Rusal’s agreements with Russian lenders and Onexim, Mukhamedshin said today. Rusal’s efforts to restructure the foreign portion of $14 billion of debt have been complicated by as terms need to be agreed among 73 offshore banks and investors. Foreign banks shut off lending to most Russian companies amid the global recession. Alfa Bank Rusal is still in dispute with Russia’s largest private lender Alfa Bank, which this morning filed an $8.7 million claim against the company, according to the Moscow court’s Web site. Alfa hasn’t received interest and penalties from Rusal after it delayed repayment on a $85.9 million loan, Vladimir Tatarchuk, the bank’s head of the corporate finance, said on Oct. 23. “Normally this kind of thing is a matter of negotiations but the first thing that happened here was court action,” Mukhamedshin said, adding Rusal estimates it owes Alfa Bank $3 million for delayed repayments. “This kind of negative PR doesn’t help” to reach an agreement, he said. Rusal is controlled by billionaire Oleg Deripaska and Onexim by billionaire Mikhail Prokhorov.