Rusal IPO Approval Said to Be Postponed by Hong Kong Exchange

Dec. 8 (Bloomberg) -- United Co. Rusal, the world’s biggest aluminum company, failed to get approval for an initial public offering from Hong Kong’s stock exchange, according to three people familiar with the matter. The decision yesterday may delay the listing until next year, said two of the people, who declined to be identified because the matter is private. The listing committee needed more time to study documents from Rusal, they said. Rusal may seek to sell a 10 percent stake in the first quarter as it expects aluminum to rise to $2,500 a metric ton, one of the people said. Aluminum futures traded at $2,164 as of 6:18 p.m. in London yesterday. The aluminum company, controlled by billionaire Oleg Deripaska, plans to be the first Russian company to trade on a Chinese exchange. More than 70 Russian and foreign banks last week completed an accord to restructure Moscow-based Rusal’s $16.8 billion of debt. “This is a really big smack in the face for Rusal,” John Meyer, head of natural resources at investment bank Fairfax I.S. Plc in London, said by phone. “It also means it may be halfway through next year before the IPO is conducted, and unfortunately for them, the outlook is anything but certain.” The exchange needs to study the debt accord, including a $4.5 billion loan from Russian state-run bank Vnesheconombank, one of the people said. Officials from the exchange didn’t answer a call to their offices from Bloomberg News out of regular working hours. Stimulus Spending Aluminum for delivery in three months has risen 41 percent on the London Metal Exchange this year as investors bet China’s $586 billion stimulus spending will spur demand from builders and automakers. Alcoa Inc., the largest U.S. aluminum producer, said in September that Chinese demand will climb 4 percent this year, compared with a previous prediction of zero growth. Rusal plans to win seven to eight major customers in China to secure long-term aluminum deliveries, head of strategy Artem Volynets said in November. It won a six-year contract last month to supply China North Industries Corp. with 1.7 million tons. The company doesn’t plan to resume shuttered capacity while demand is still recovering, Deripaska, 41, who is also CEO, said last week. Global aluminum demand will grow 8.2 percent in 2010 after contracting 6.5 percent this year, according to Barclays Capital. Supply will exceed demand by 1.63 million tons in 2010, up 29 percent from this year, it said. Norilsk Stake Rusal’s debt almost doubled last year after it bought 25 percent of OAO GMK Norilsk Nickel, Russia’s biggest mining company, for $7 billion in cash and a 14 percent Rusal stake. Commodity prices subsequently collapsed, and Rusal had a net loss of $6 billion last year, Vedomosti reported in October. Rusal received $4.5 billion from Vnesheconombank in October 2008, the biggest state bailout of any Russian company. The Russian aluminum producer is in talks with potential investors including China Investment Corp., the nation’s sovereign wealth fund, and Singapore’s Temasek Holdings Pte, the Hong Kong Economic Journal wrote in October. To contact the reporters on this story: Yuriy Humber in Moscow at yhumber@bloomberg.net; Bei Hu in Hong Kong at bhu5@bloomberg.net