RUSAL debt pause extended, IPO at risk -bankers

LONDON/MOSCOW, Oct 28 - Russian aluminium producer UC RUSAL has to reach agreement with its foreign creditors on $7.3 billion of debt by mid November if the company's IPO is to proceed, senior bankers said on Wednesday. The debt standstill agreement, which expires on Friday, will be extended until mid-December in order for all the banks to reach agreement on Russia's largest ever restructuring, seen as key to the fortunes of RUSAL's main owner Oleg Deripaska. RUSAL spokeswoman Vera Kurochkina declined to comment. Deripaska, once Russia's richest man and now its most indebted tycoon, intends to use 80 percent of the proceeds from a planned stock listing in Hong Kong to pay back debt, a source told Reuters earlier this month. [ID:nL5562033]. "For the IPO to go through ... they need to be able to say the restructuring of the Western banks is closed by 12 November. If it is closed, then all this is public information, and if it doesn't , then the IPO doesn't go through anyway," one of the bankers close to the restructuring talks said on Wednesday. Another banker also said the middle of November was the deadline for the IPO to be feasible this year. "The banks need roughly a month to prepare the company for sale," a source with a major investment bank said. The first banker said he was optimistic that the final restructuring deal, which has been repeatedly postponed, would be signed in time. "I think most banks will make it. The fear is that as the cashflow improves on the back of the higher aluminium price, Deripaska may decide to sit tight and then try to renegotiate a better deal, so everyone wants to nail this now while he still wants to do the IPO this year -- it's in our interests," the banker said. Another banker was less optimistic. "No investor will buy the shares before the restructuring is completed," he said, adding that multiple extensions of the standstill were due to complications in talks between Russian banks and RUSAL, whose total debts amount to $16.8 billion. The Western banks wanted RUSAL to dispose of Norilsk Nickel [NKELN.UL] to raise money, but Deripaska offered the IPO as an alternative fast track to debt reduction. RUSAL has reached agreement with its Russian creditors, which one banker said had cleared a major hurdle in reaching agreement with foreign banks. "Sberbank, VEB, Alfa Bank are paid off and crucially Onexim has agreed to convert $2 billion debt into equity provided they get paid the back-interest due this year," the banker said. On Monday, RUSAL said half the international banks had agreed to restructure its $7.3 billion debt. [ID:nLQ177938] (Additional reporting by Oksana Kobzeva in Moscow, editing by Will Waterman)