Rusal reprieve

2 December 2009 By Jason Bush

The aluminium group has agreed to restructure $7.4 billion in foreign debt, paving the way for an IPO. That will be a relief to western lenders and controlling shareholder Oleg Deripaska. But foreign banks may struggle to reach similar deals with other Russian borrowers.

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RUSAL has reached an agreement with creditors over its $7.4bn of foreign borrowings. An announcement by the Russian aluminum giant is imminent, according to market sources.

The group has been negotiating for months over the restructuring of its debts, and reached a preliminary agreement in July. However, the deadline for finalising a deal with all 73 foreign banks slipped repeatedly.

The terms of the deal are expected to be similar to the earlier agreement. This envisaged pushing out the maturity of the debt over four years, with the option of a further threeyear extension. The interest rate will depend on the ratio between RUSAL's debt and its earnings, varying between 1.75 percent and 7 percent over Libor.

RUSAL needed a restructuring agreement before it could proceed with its planned initial public offering in Hong Kong in Paris before the yearend. RUSAL hopes to raise around $2 billion from the float, most of which will be used to repay debts.

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