Rusal Falls for Fourth Day, Declines 30% Since HK IPO (Correct)

Feb. 23 (Bloomberg) -- United Co. Rusal Plc, the world’s largest aluminum producer, declined for the fourth straight trading day in Hong Kong, extending losses since its debut to more than 30 percent.

The shares fell 6.7 percent to HK$7.47 at the close of trading today on the Hong Kong stock exchange. The city’s key Hang Seng Index fell 0.6 percent. Rusal, controlled by billionaire Oleg Deripaska, raised $2.2 billion last month in an initial share offer, selling shares at HK$10.8 each.

“The main problem with Rusal is its debt,” said Kenny Tang, an analyst at Redford Assets Management in Hong Kong. “It relies on the short-term funding and facilities from the banks for its operation, which might be a concern for investors. They are worried about Rusal’s cash flows after the listing.”

Rusal, barred from marketing to retail investors because of that concern, won investments from Hong Kong billionaire Li Ka- shing and New York hedge-fund manager Paulson & Co.

The company, which signed an accord in December with 70 creditors in Russia’s biggest corporate loan restructuring, cut its debt this month after paying $2.14 billion to banks and billionaire shareholder Mikhail Prokhorov from the cash raised by the initial share sale.

The Moscow-based company’s debt declined to $12.9 billion, according to a Feb. 4 statement. It gave overseas lenders $1.46 billion, Prokhorov $278 million, Russian banks $253 million, and paid $152 million in fees.

Share Slump

Rusal shares fell 5.4 percent yesterday. The stock is the biggest loser among the five companies that debuted in Hong Kong this year and is set to record the worst first month return of any new offering since China South City Holdings Ltd. That stock fell 34 percent in the month after it debuted on Sept. 30, according to data on the Bloomberg.

EuroSibEnergo is expected to list on the Hong Kong exchange this year, after raising between $1 billion and $2 billion, the South China Morning Post reported today, citing unidentified bankers who worked on the Rusal IPO.

Trading in shares of Moscow-based Rusal, the first Russian company to list in Hong Kong, will be key to Asian investors’ perception of further share sales from companies located in Russia, Reinout Koopmans, Deutsche Bank AG’s head of equity capital markets for emerging Europe, said earlier this month. State-run OAO Russian Railways is among companies from the nation seeking to tap the Hong Kong market as early as this year.

Investors bought and sold 22.2 million Rusal shares today, about 12 percent of the 188.2 million shares traded when the stock debuted on Jan. 27.