Russian metals giant Rusal wins reprieve on huge debt

MOSCOW — Russian metals giant Rusal said on Thursday it had restructured its crushing multibillion-dollar debt in a complex deal with more than 70 lenders, lifting a key barrier to its plans to list in Hong Kong. "The signing of Rusal?s debt restructuring deal closes the chapter on a project of unprecedented size and complexity," Rusal's billionaire owner and chief executive Oleg Deripaska said in a statement. "All the parties involved in it have passed this test of the world?s economic slowdown." The landmark deal won Rusal, the world's biggest aluminium producer, breathing room to repay 16.8 billion dollars (11.1 billion euros) of debt over seven years and raise new capital, including with the expected initial public offering (IPO). "The company has signed all the necessary documents on the comprehensive restructuring of its debt of 16.8 billion dollars," Rusal said in a statement. "More than 70 lenders took part in the restructuring of about 50 credit agreements." The lengthy talks on restructuring Rusal's debt had delayed the company's plan to raise up to 2.5 billion dollars with the sale of a 10-percent stake in an IPO on stock markets in Hong Kong and Paris. On July 30, Rusal had declared its debt restructuring finalised, but months of haggling followed with its last remaining lender, London-based hedge fund Blue Crest, to which it owes up to 100 million dollars, according to the daily newspaper Vedomosti. The aluminium group said the deal would allow it to restructure 7.4-billion dollars of debt borrowed from foreign banks when metal prices were at record highs last year. In the first phase, Rusal will pay interest on reimbursements to foreign creditors at 1.75 to 3.5 percent above London interbank offered rate (Libor), the company said. "During the initial four year period, principal repayments will be made on a 'pay-if-you-can' basis predicated on the performance of the business," it said. The rest of the repayments will involve refinancing by current lenders over a further three years. Rusal also signed an agreement with three Russian state banks on 2.1 billion dollars of debt and with Russian billionaire Mikhail Prokhorov's Onexim group on another 2.7 billion dollars of debt, the company said. Rusal added it would seek to pay back a total of 5 billion dollars of debt owed all lenders by the end of 2013. Prokhorov meanwhile agreed to swap some of his debt for a larger Rusal stake, making him Rusal?s second-largest shareholder. Under the deal, his Onexim group will acquire an extra 6-percent stake to raise its holding to 20 percent. That still leaves a majority stake of 50.76 percent in the hands of Deripaska, Russia's former richest man, who saw his personal fortune decimated in the economic crisis. The rest is owned by other private shareholders. Earlier on Thursday, the Hong Kong Stock Exchange postponed for the second time a decision on Rusal's plan to list, a source close to the situation told AFP. The board will now rule on Rusal's application on December 7. The long-awaited restructuring announcement is expected to give a green light to the company's plan to launch the listing before Christmas. If successful, Rusal will be the first Russian firm to list in Hong Kong. With the IPO, Deripaska will see his holding drop below a 50-percent controlling stake. But Russia's state Vneshekonom Bank, or VEB, which bailed out Rusal in late 2008, has said it might buy shares at the company's IPO -- the first time the Russian government will have taken a stake in the group. Russian Finance Minister Alexei Kudrin last month said VEB could purchase up to a 3-percent stake in a move to help Deripaska retain control of the company. Rusal accounts for around 12 percent of the world's aluminium supply.