It took dealing with more than 70 lenders, but Rusal has managed to restructure its giant load of debt.
The move was seen as a key step to towards paving the way for the Russian aluminum producer to be the first Russian company to list on the Hong Kong Stock Exchange.
“The signing of Rusal’s debt restructuring deal closes the chapter on a project of unprecedented size and complexity,” Rusal’s chief executive Oleg Deripaska said in a statement.
The landmark deal will let the company repay US$16.8 billion dollars of debt spread over 50 credit agreements.
Rusal also says it has plans to raise new capital – much of which is expected to come from an initial public offering (IPO). It is expected to raise US$2.5 billion by selling a 10% stake to stock markets in Hong Kong and Paris.
The IPO in Hong Kong would have been done sooner, if not for the amount of time needed to clean up its debt issues.
The Exchange has postponed a decision on the Rusal listing twice because of debt issues and is now expected to make a ruling on December 7.
Rusal announced it had restructured its debt back at the end of July, however the announcement was premature. According to the Russian newspaper Vedomosti the London-based hedge fund Blue Crest, was not satisfied with the terms. Rusal is said to owe Blue Crest US$100 million dollars.
Of the US$16.8 billion in debt, US$7.4 billion is to international lenders.
The restructuring will see Rusal pay foreign lenders in two phases.
In the first phase it will pay interest of Libor plus 1.75 to 3.5% over four years, with payments on principle being done on a pay-as-you-can basis.
After the four years another refinancing will be done for a second phase that will span over three years.
Rusal says it is aiming to pay back US$5 billion of debt by the end of 2013.
Part of the restructuring is said to include a deal with Russian billionaire Mikhail Prokhorov’s Onexim group – a private investment fund — that will see Prokhorov exchange US$1.82 billion of the US$2.7 billion owed to him for another 6% stake in Rusal. That will bring his stake to 20% making Prokhorov the second largest stakeholder in the company behind Deripaska who holds a 51% stake.
Only a short time ago Deripaska was considered to be Russia’s richest man, but the economic crisis, and the toll it took on commodity prices, severely cut into his fortunes.
Rusal is the world’s biggest aluminum producer.
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