UPDATE: Rusal, Interros Near Loan Pacts With Sberbank - Sources

MOSCOW, Aug. 9 -- Russian state-controlled bank OAO Sberbank (SBER.RS) is ready to extend a helping hand to billionaires fighting for control of the country's largest miner, OAO Norilsk Nickel (GMKN.RS), people familiar with the matter said.

The bank is close to signing loan agreements that would ease debt problems of both aluminum giant United Co. Rusal (0486.HK), in which Oleg Deripaska is the major shareholder and chief executive, and Interros Holding, controlled by Vladimir Potanin, the people said. Each company has an approximately one-quarter stake in Norilsk, the world's largest producer of nickel.

Rusal, which has a debt of about $12 billion, is close to signing a deal with the bank that will see the aluminum company refinancing its $4.5 billion debt to the state development bank Vnesheconombank, or VEB, which is due in the late fall, two people said The agreement in principle has been reached prior to Rusal's initial public offering of its shares on the Hong Kong Stock Exchange in January, and the final deal is expected shortly.

VEB provided the loan, to which Rusal has mortgaged its shares in Norilsk in late 2008, to refinance the aluminum company's debt to a pool of international banks. According to the people, the new agreement will also see Rusal's stake in Norilsk mortgaged, but its tenor would be extended till 2013.

Interros, which faces an approximately $1 billion debt repayment to another state-controlled bank VTB (VTBR.RS) later this year, is also close to getting a credit line of about $1.5 billion from Sberbank, according to other two people, familiar with the situation.

Interros was trying to get a syndicated loan from a pool of international banks, headed by Bank of America Merrill Lynch and Credit Suisse earlier this year. However, the talks didn't bear fruit as banks hesitated to provide funds during the markets' chaos in early summer, which was followed by Norilsk's annual general meeting and rancor among shareholders.

Interros is still in talks with other international banks, people said.

Rusal has voiced dissatisfaction with the outcome of Norilsk's annual meeting June 28, as well as with the company's strategy and management. At the meeting, Rusal's board representation fell to three people from four, and Chairman Alexander Voloshin, whom Rusal supported, was ousted. Rusal has repeatedly accused both Interros and Norilsk management of irregularities during the meeting, and called for replacement of the company's current CEO Vladimir Strzhalkovsky. Rusal has already complained about the situation to the country's financial markets watchdog and to the Russian president Dmitri Medvedev.

Both Interros and Norilsk management deny any wrongdoing.

Rusal Friday requested an extraordinary general shareholder meeting at Norilsk to demand the election of a new board. However, Rusal alone does not have enough votes to change the situation, while Norilsk management, which votes with a 8.5% stake of treasury shares, and Interros have repeatedly said they were satisfied with the current board.

Rusal urged Norilsk to sell or dispose of noncore assets, such as U.S. platinum producer Stillwater Mining Co. (SWC), and minimize the cash it gives to other noncore activities, like sponsoring Russia's national soccer team. Rusal also called for tighter financial controls throughout Norilsk and cost cuts through such measures as revising raw-material suppliers' contracts.

Both Rusal, on one side, and Interros and Norilsk, on the other, have said they are ready to buy the competing side out, while denying any plans of selling its own stakes.

The forthcoming lending agreements with Sberbank may, theoretically, make both sides' buying positions stronger. However, as none of the beleaguered billionaires is ready to sell, and both of them have heavy debt burdens and restrictions imposed on them by their lenders, a deal doesn't seem likely at this stage.

Moreover, if any of them accumulates more than a 30% stake in the company, he would have to propose a buyout of the rest of the stock, to which none has sufficient funds.

Also, as people familiar with the matter said, neither the president nor Prime Minister Vladimir Putin, the most influential people in corporate conflicts in the country, have made up their minds on which side to support in the conflict, or how to make them reach a compromise.

"It looks like a zugzwang for both Potanin and Deripaska now, one person said, referring to a position in chess in which every move available to the player is disadvantageous.

The state has considered at some stage to buy a stake in Norilsk, either the treasury stock or stakes of one or both billionaires, the people said.