RUSAL Director Sees New Norilsk Merger Talks

MOSCOW, Feb. 5 -- The world's top aluminium producer, Russia's UC RUSAL (0486.HK) (RUAL.PA) could restart merger talks with metals giant Norilsk Nickel (GMKN.MM) now it has become a public company, a board member told Reuters.

"Now that RUSAL has liquid shares I see no obstacles for a restart of the dialogue between the shareholders on the merger of RUSAL and Norilsk Nickel," Dmitry Razumov, who represents RUSAL shareholder the Onexim Group on the RUSAL board, told Reuters in an interview.

RUSAL raised $2.2 billion in an IPO in Hong Kong and Paris last month, in large part to pay down the company's multi-billion dollar debt pile. 

Razumov is the chief executive of Onexim, an investment vehicle of Russia's richest man Mikhail Prokhorov, through which he holds a 17 percent stake in RUSAL.

RUSAL bought a 25 percent stake in Norilsk, the world's top producer of nickel and platinum group metal palladium, from Prokhorov at the beginning of 2008 in exchange for a stake in it and an undisclosed cash amount.

RUSAL later suggested the two firms may merge but the plan never materialised because of the economic crisis and debt problems of the aluminium giant.

"We believe that in the long run Norilsk and RUSAL combined will be able to compete more successfully on the international level than separately," Razumov said.

"Sooner or later the enlargement will become a necessity, or else you won't be able to compete with big international players."

Another big shareholder at Norilsk with a stake equal to the one of RUSAL is the oligarch Vladimir Potanin.

RUSAL's major shareholders besides Prokhorov are tycoon Oleg Deripaska with 47.59 percent, SUAL Partners, controlled by businessmen Viktor Vekselberg and Len Blavatnik with 15.86 percent, and Swiss-based commodities trader Glencore with 8.65 percent.

DIVIDENDS

Razumov said he was confident RUSAL shareholders, including post-IPO investors such as the hedge fund Paulson & Co, would receive dividends in the medium term.

"There is no doubt that we expect dividend profit on RUSAL's shares already in the next few years," he said.

Under RUSAL's debt restructuring deal with lenders the company agreed not to pay a dividend as long as the ratio of its debt to earnings before interest, taxation, depreciation and amortisation (EBITDA) does not fall below three.

"Even with current aluminium prices, RUSAL may dramatically cut its debt," Razumov said. "But we believe aluminium prices may rise in the next few years."

RUSAL has said it expects its 2009 net profit to be $434 million after higher aluminium prices and cost-cutting measures turned around a first-half loss of $868 million.