United Co. Rusal won over the majority of its lenders on refinancing a $4.75 billion loan after talks with China, as the world’s largest aluminum producer moves to avoid a default.
Rusal hopes to complete the refinancing “soon,” after 95 percent of the creditors agreed to a plan, Rusal’s press service said by e-mail today, declining to comment on which banks agreed. The company has paid down part of the loan, which was taken in 2011.
Executives from the aluminum producer, including Deputy Chief Executive Officer Oleg Mukhamedshin, traveled to Beijing on March 28 to hold talks with China Development Bank, a member of the original group of lenders, two people with direct knowledge of the situation said, asking not to be named as the information is private. The one holdout is a small institution in Europe, the people said, declining to identify it.
China Development Bank didn’t answer calls seeking comment.
Rusal had net debt of $10.1 billion at the end of 2013 and posted an annual net loss of $3.2 billion as it wrote down the value of assets after aluminum prices fell, according to a financial statement published March 28. The company won an agreement from Russia’s VTB Group, OAO Gazprombank and OAO Sberbank to refinance $5.6 billion of debt, according to a presentation the same day.
The company has requested that the banks on the $4.75 billion loan agree to certain forbearances and not exercise certain rights until July 7, giving it more time to restructure its debts, Rusal said in the March 28 statement. The lenders are unlikely to demand repayment while talks continue, according to the report.
Rusal is seeking to merge the remainder due on the $4.75 billion loan with a separate $400 million credit, according to the statement. The company said it still owes $3.2 billion on the larger loan.
Management has also secured additional financing from a major customer, Rusal said last week, without giving the name. It received several hundred million dollars in prepayment financing from Glencore Xstrata Plc, a shareholder and client, for alumina, the Financial Times reported last month.