UC RUSAL, the aluminium firm controlled by Russian magnate Oleg Deripaska, has re-started plans for a Hong Kong stock listing to raise about $2 billion at a time when it is trying to restructure large debts. Hong Kong witnessed its biggest IPO of the year last week with Metallurgical Corp of China raising $2.3 billion while the US IPO market had its busiest week since December 2007.
The world's largest aluminium producer plans the initial public offering by the end of this year, a source with direct knowledge of the matter told Reuters on Monday, though several key steps must first be completed. United Company RUSAL, working to restructure debts totalling over $16 billion, will likely need approval from both creditors and Hong Kong regulatory authorities before the IPO, which sources said could raise between $1.5 billion and $2.5 billion.
The sources spoke on condition of anonymity because they were not authorised to speak publicly about the offering. Deripaska, rated Russia's richest man by Forbes magazine before the financial crisis struck last year, is in protracted talks with Russian and international lenders to restructure the debts faced by his various companies.
UC RUSAL, whose arrears include a $7.3 billion debt to a club of over 70 international banks, first pursued the Hong Kong listing last year before financial markets dropped. Its restructuring case is viewed by analysts as a bellwether for the ability of indebted Russian companies and their creditors to weather the country's first recession in a decade.
UC RUSAL has to meet strict payment targets under the draft terms of the restructuring agreement and must seek alternative sources of liquidity if aluminium prices are weak and fail to yield enough cash flow to keep RUSAL running and paying debts. So far, creditors have said, the talks have focused on the potential need for asset sales if the aluminium giant comes up short of funds.
RUSAL's apparent willingness to raise money through a share sale would likely be welcomed by creditors, though it was so far short on details and unlikely before a final debt deal. "We all want this to happen. It has to be contingent on this restructuring agreement being signed," a creditor's club source said. Hopes that oil and metals prices have bottomed out are also renewing interest in Russia in capital raisings.
UC RUSAL said on September 18 it hoped to finalise the terms of its restructuring with creditors by the end of October. The firm has several times extended standstill deals on debt repayment pending a resolution to the restructuring. UC RUSAL said in an emailed statement on Monday: "No decisions over the timing, venue or other details of the possible IPO have been taken at the present time."
Britain's Sunday Times newspaper reported that UC RUSAL was prepared to file a prospectus for a Hong Kong listing, which would value the firm at $30 billion. UC RUSAL directors were expected to approve the deal and file an application before week's end if the board approves, the newspaper said on Sunday, without identifying its sources.
UC RUSAL planned to list 10 percent of its shares in Hong Kong, in an offering handled by Credit Suisse and Goldman Sachs, the newspaper said. A sticking point in UC RUSAL's debt restructuring has been its dispute with Alfa-Bank over amounts owed to the private Russian lender.
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