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Deripaska speaking to Sberbank chief German Gref. The loan may still need approval from a credit committee.
Sberbank is expected to step in with a loan to cover United Company RusAl’s controversial decision to pay off its debt to Alfa Bank, sources close to the RusAl talks said Tuesday.
A spokeswoman for RusAl, which announced the repayment to privately owned Alfa Bank last week, said the company repaid Alfa from its own cash resources.
The world’s largest aluminum company has outraged a group of more than 70 creditors, working to restructure $7.3 billion of RusAl’s foreign debt, by repaying Alfa ahead of other lenders, sources close to the talks said.
RusAl’s creditors have appealed for Kremlin help at tricky moments in the restructuring talks, at one point writing to senior economic adviser Arkady Dvorkovich to intervene in the debt battle between RusAl majority owner Oleg Deripaska and Alfa Group’s Mikhail Fridman.
But they have largely been met with silence.
The size of the loan from Alfa was relatively small — $85.9 million — but its repayment caused consternation because it followed Alfa’s threat to bankrupt two key RusAl units and broke the ranks of RusAl’s creditors.
RusAl’s total debt to banks is about $16 billion.
“Alfa played that classic card of the small creditor faced with a global restructuring which they couldn’t themselves afford — though they could afford a global bankruptcy even less — and pressed the nuclear button,” the source said.
“Result: Alfa gets repaid in full with acquiescence from other creditors, who simply want the barbarians to withdraw from the gates.”
It was not clear when the Sberbank loan was offered. Sources said RusAl had been assured of the loan but that it may yet require approval from the state bank’s credit committee, one source said.
When the restructuring talks began, the standstill agreement bore a condition precedent that Sberbank would assume RusAl’s debt to Alfa, banking sources have said.
The plan broke down, however, when Sberbank said it could not take on any more exposure to RusAl without breaking through risk controls, after which the restructuring talks with foreign creditors proceeded under the shadow of Alfa’s demands.
The loan, expected to at least cover the $89.5 million repaid to Alfa, emerged around the time of a renewed plan to sell RusAl shares on the Hong Kong stock exchange, shelved last year when the financial crisis savaged metals prices.
Sources close to the talks said an IPO would be a welcome measure to increase liquidity but was practically impossible until a final restructuring agreement. RusAl has just signed its latest standstill agreement, which is good until at least the end of October.
A recent bump in aluminum prices meant RusAl’s ability to repay Alfa was not in doubt.
Creditors are concerned, however, about long-term prices for the metal while global demand struggles and the long line of lenders are waiting for a share of RusAl’s uncertain cash flows.
Benchmark aluminum on the London Metal Exchange hit a record of $3,380 per ton in July 2008 and fell below $1,300 in February as markets priced in collapsing demand for the metal. It is now at about $1,800 per ton.
Under the draft terms of the restructuring, RusAl must meet a strict payment schedule, which becomes more demanding as aluminum prices rise.
