RUSAL clears $7.4 bln debt hurdle to IPO - sources

MOSCOW, Dec 2 - Indebted aluminium giant UC RUSAL has moved a step closer to a $2 billion share issue by securing approval for Russia's biggest ever debt restructuring deal from the last of over 70 creditors, bank sources said on Wednesday. UC RUSAL, controlled by industrial magnate Oleg Deripaska, ended almost a year of tortuous negotiations on its $7.4 billion foreign debt when a British fund agreed this week to join other lenders in the restructuring, the sources said. "The next move for creditors is to pray the IPO is a success," said Alfa-Bank analyst Maxim Semenovykh. "It's likely that most of the money raised in an IPO will be distributed to creditors, as the company needs to pay down its debt load." Deripaska, once ranked Russia's richest man, built UC RUSAL into the world's largest aluminium producer before the economic crisis wiped 60 percent off the value of the metal and left the company powerless to service debts in excess of $16 billion. Foreign banks view a successful conclusion to restructuring as a gauge of Russia's ability to manage $475 billion in foreign debt accrued before markets crashed in the second half of 2008. "Approval has been received from the final creditor," said one of several banking sources who spoke to Reuters on condition of anonymity. "The agreement will be signed in the near future." UC RUSAL needs agreement on the debt to pursue its plan to list 10 percent of shares in Hong Kong and Paris. Questions remain over the timing. Hong Kong's stock exchange committee is scheduled to meet on Monday, Dec. 7, the day UC RUSAL had planned to begin a roadshow, to discuss approval of the IPO. Should the listing be approved, the roadshow would begin on Tuesday, Dec. 8, a source close to the placement said. UC RUSAL declined to comment. STATE SUPPORT FOR IPO Investors in Hong Kong are less familiar with commodity firms than other offerings that have recently hit the market, such as property firms and banks. Resourcehouse, the commodities group controlled by billionaire Clive Palmer, postponed its up to $3 billion Hong Kong IPO roadshow to next year, due to weak market demand. UC RUSAL has at least one willing buyer, however, in state bank VEB, whose plans to participate in the IPO were confirmed on Nov. 25 by Finance Minister Alexei Kudrin. [ID:nGEE5AO10Q] VEB, a major domestic creditor, has pledged to buy a 3 percent stake at a price valuing RUSAL at close to $20 billion. "That immediately covers part of the order book. Investors might think, if VEB is participating, why not?" said Alexei Morozov, analyst at UBS in Moscow. State participation, said Kudrin, would dilute Deripaska's stake to below majority. But the oligarch has traditionally enjoyed Kremlin backing and Russia is unlikely to relinquish control of strategic assets that employ hundreds of thousands. Banks were also keen to commit soon to avoid the risk of RUSAL opting out as Russia's oil-reliant economy emerges from its first recession in a decade and aluminium prices -- already up two-thirds from February's seven-year lows -- bounce back. "The banks are already rushing to sign the restructuring. If we were to drag this out, then RUSAL could say they no longer need the restructuring as they count on cash-flow from a revival in metals prices and demand," a second banking source told Reuters. Three more banking sources said the deal was reached after London-based fund BlueCrest Capital Management -- the last creditor to agree -- signed up to the proposal. BlueCrest declined immediate comment. CONDITIONS UNCHANGED The second banking source said conditions of the restructuring were identical to those agreed in July, when RUSAL promised to repay $5 billion of the $7.4 billion by the end of 2013 and to refinance the remainder for another three years. Repayment of principal debt will be on a "pay-as-you-can" basis for the first four years and 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. UC RUSAL has also agreed not to pay a dividend as long as its debt is three times or greater than its earnings before interest, taxation, depreciation and amortisation . (Additional reporting by John Bowker, Dmitry Sergeyev, Aleksandras Budrys and Polina Devitt in Moscow, Kennix Chim in Hong Kong and Christopher Mangham in London, writing by Robin Paxton; editing by Judy MacInnes) ((For a related factbox, please double click on [ID:nGEE5B10IE])) ((robin.paxton@reuters.com; +7 495 775 1242; Reuters Messaging: robin.paxton.reuters.com@reuters.net))