(Bloomberg)-- United Co. Rusal will refinance its entire $11.3 billion of debt by as early as September, removing curbs bankers imposed on the world’s largest aluminum producer during Russia’s biggest corporate restructuring in 2009.
Limits on paying dividends will be among the restrictions to be lifted, said Oleg Mukhamedshin, head of capital markets.
Rusal expects to agree the terms of a $4 billion five-year syndicated loan with foreign lenders in May, he said by phone. “We’re in negotiations with Russian lenders to refinance and prolong loans for at least five years until 2016.”
Rusal, controlled by billionaire Oleg Deripaska, signed a $17 billion accord in 2009 that prevented it paying dividends until the ratio of net debt to earnings before interest, taxes, depreciation and amortization fell to 3. The $4 billion will refinance a loan Rusal used at that time to restructure debt during the world financial crisis, Mukhamedshin said in Moscow.
“We’ll be able to remove restrictions on paying dividends and making investments by the end of this year,” he said in an interview yesterday. “Technically, there will be a possibility of paying dividends for 2011 if shareholders decide to.”
Rusal follows Metalloinvest, owned by billionaire Alisher Usmanov, in using a syndicated loan to refinance debt. In April, Metalloinvest said its units borrowed $3.1 billion at a rate of 2.25 percentage points above the London interbank offered rate from banks led by BNP Paribas (BNP) SA and Deutsche Bank AG. (DBK)
Rusal, which has a written policy of paying half of its net income in dividends, may report 2011 profit of $3.08 billion, or $1.8 billion excluding the contribution from the 25 percent it owns in OAO GMK Norilsk Nickel, Marat Gabitov, an analyst in Moscow at Unicredit, said by phone today. “Even if Rusal pays half of this sum in dividends, it will be good,” Gabitov said.
Rusal held talks with foreign borrowers in April including BNP Paribas, Credit Agricole SA (ACA), Commerzbank AG (CBK), ING Groep NV (INGA), Natixis, Royal Bank of Scotland NV, Sumitomo Mitsui Banking Corp., Societe Generale (GLE) and UniCredit SpA (UCG), Euroweek reported. BNP Paribas, Credit Agricole, Commerzbank, Natixis (KN), Societe Generale and ING weren’t immediately able to comment when Bloomberg contacted their press services by phone and e-mail. RBS sent an e-mailed reply declining to comment.
OAO Sberbank and VTB, the Russian state-run banks that are Rusal’s biggest creditors, also declined to comment on Rusal’s borrowings when Bloomberg News contacted their respective spokesmen, Vladimir Gubarev and Vadim Sukhoverkhov.
Rusal expects to gain by as early as June the approval from the supervisory board of state-run VEB it needs for a loan to resume building the Taishet aluminum smelter, Mukhamedshin said.
The company is open to other funding options, though yuan debt is less attractive as the Chinese currency rises. It also aims to spur trading in its shares, including through a possible listing in New York or Toronto, Mukhamedshin said.
“Toronto looks more interesting as a major exchange for mining companies and, since Rio Tinto took control of Alcan, there are no pure aluminum producers traded there,” he said. “Potentially we see big interest in our stocks from investors from Canada but no decision has yet been made.”
Rusal held a dual initial public offering for a 10.6 percent stake in Hong Kong and Paris in early 2010.
“It doesn’t mean that we want to delist our shares from Paris’s Euronext but we see very low liquidity,” Mukhamedshin said, adding that trading in depositary receipts in Russia is about 25 percent to 30 percent of volumes in Hong Kong.