|
Article Excerpt
IN BRIEF
Editor's Choice
*** Oleg Deripaska's UC RUSAL this week signed a standstill agreement in relation to the restructuring of its debt to the international lending banks, effective for a period of two months and with the possibility of extension for a further month. The agreement covers more than 30 transactions, including syndicated and bi-lateral loan agreements involving more than 70 banks and will provide RUSAL with additional liquidity. Russian presidential economics aide Arkady Dvorkovich said one option under consideration was that some or all of the $7-billion debt owed by RUSAL to Russian state banks could be swapped for equity. Meanwhile, First Deputy Prime Minister Igor Shuvalov reiterated the Russian government expects all debt to be repaid, saying the future investment climate and level of confidence in Russia will depend on this, calling on diligent borrowers to put a recovery program before them and show how they will work on their own markets to gain the opportunity to pay off loans. He also said the state could become a shareholder in RUSAL and other major companies only "in exceptional circumstances," with any decisions being discussed in public and one-off in nature.
*** The board of directors at Arctic smelting and mining giant Norilsk Nickel have approved the sale of treasury shares, with sources telling Interfax that a split decision was made on the lower boundary of the sales price. Abstentions and votes cast against the proposal came from independent directors, who argued that the sale of a large packet of shares could have a negative impact on Norilsk's stock price. The strategy for selling the shares - to a strategic investor or on the open market - has not been determined, but Deutsche Bank has been named a potential buyer. The results of the board meeting in question have yet to be officially announced.
*** Russian steelmaker Severstal announced this week that it will pass on Q408 dividends after posting net losses of slightly more the $1.2 billion to International Financial Reporting Standards (IFRS) for Q408. Despite the losses, Severstal does not anticipate any problems with the repayment of debt in 2009, however, jobs are set to go and Severstal is looking at cutting 9,000-9,500 jobs at its Russia-based steel plants.
*** Some of Russia's biggest steel companies, including Severstal, NLMK and MMK, are reportedly set to ask the Industry and Trade Ministry to hike import duty on galvanized roll from 5% to 33% for a period of at least 200 days. Despite the companies having capacity to produce 3.5 million tonnes of galvanized steel for this and polymer-coated steels, they claim Russian producers have been pushed off the domestic market with imports of galvanized steel from Kazakhstan, China and Ukraine increasing market share. The Ministry said an anti-dumping probe could be launched if the steel producers provided evidence that the sector had deteriorated.
*** London-listed steel major Novolipetsk Steel and DBO Holdings, Inc. have signed a settlement agreement with respect to their dispute concerning NLMK's proposed acquisition of John Maneely Company, which NLMK terminated late last year. The agreement provides for the full mutual release and discharge by NLMK and DBO from their claims arising from the transaction, with NLMK to pay DBO a settlement amount of $234 million within four business days of signing. NLMK is also seeking to recoup money itself, and may take automaker GAZ to court over outstanding overall past-due debt of 1.5 billion roubles. In other news, NLMK announced it has upped capacity utilization to 85% and has signed a 3-year deal with Russia's biggest privately-owned oil company, Lukoil, on cooperation and technical partnership.
*** Prime Minister Vladimir Putin this week dismissed calls for a state metals reserve to be formed in Russia, saying it would be impossible to purchase commodities for such a reserve while keeping social spending. Putin also said Russian producers were not in a position to affect global demand on a massive scale, but that domestic demand can be regulated and is to some extent being carried out. He said the government could increase the state order for metal and that the 50 billion rubles allocated to Russian Railways (RZD) had made a significant contribution.
*** Gold miner Peter Hambro Mining and Anglo-Russian mineral developer Aricom announced this week that they expect to wrap their merger up in the spring, well before the August deadline, subject to regulatory approval in Britain and in Russia. The merger will create a mining industry leader in Russia's Far East with a pro forma market capitalization of approximately $1.15 billion. PHM also said this week that it will acquire a 1.1% stake in Rusoro Mining as part of an additional share issue by the Canadian company, which operates principally in Venezuela. Back in Russia, PHM said it aims to be producing over 1 million ounces of gold in Russia in 2012, if new projects successfully come on-stream.
*** Rosatom said this week that it expects uranium to regain its attractiveness as a form of investment, with prices to start rising again this year and continue to grow in the long-term, albeit at a slow pace. The onset of the global financial crisis saw many investors offload uranium assets, significantly lowering its trading price. However, Rosatom believes current spot prices to be below fair, and sees prices jumping as a number of nuclear power plants in the region come online, with more due to be commissioned.
*** Russia's state-owned uranium mining holding Atomredmetzoloto this week closed the acquisition of the Russian stakes in two Kazakhstan-based uranium mining joint ventures from Vasily Anisimov, co-owner of the Metalloinvest holding, buying a 50%-interest in TOO Karatau and 25% of JSC Akbastau from Anisimov's Effective Energy N.V. for an undisclosed amount. ARMZ has now consolidated all of Russia's Kazakhstan-based uranium mining assets.
TOP STORIES
UC RUSAL signs standstill agreement with banks
MOSCOW. (Interfax) - Oleg Deripaska's UC RUSAL has signed a standstill agreement in relation to the restructuring of its debt to the international lending banks, effective for a period of two months and with the possibility of extension for a further month. Russian presidential economics aide Arkady Dvorkovich said one option under consideration was that some or all of the $7-billion debt owed by RUSAL to Russian state banks could be swapped for equity. Meanwhile, First Deputy Prime Minister Igor Shuvalov said the state could become a shareholder in RUSAL and other major companies only "in exceptional circumstances," but that it expects all debt to the government to be repaid.
Standstill agreement
RUSAL has signed a standstill agreement in relation to the restructuring of its debt to the international lending banks, the company said in a press release.
The standstill will be effective for a period of two months with the possibility of extension for a further month and will provide RUSAL with additional liquidity.
The agreement covers more than 30 transactions, including syndicated and bi-lateral loan agreements, bank guarantees and letters of credit, which involve more than 70 banks.
RUSAL said the agreement has already obtained support from an overwhelming majority of RUSAL's international lending banks, which is a key condition for the agreement to come into effect. During the period of the agreement the company plans to coordinate the terms of a long-term restructuring to the benefit of all stakeholders.
At present RUSAL's debt is $14 billion, including $7.4 billion owed to its international banks, the company said.
The signing of the standstill agreement has also been supported by RUSAL's Russian lenders.
In December 2008, RUSAL initiated a dialogue with its international lending banks who formed a coordinating committee to continue discussions with the company and its advisers about potential amendments of the company's credit facilities in view of the situation in the aluminum market.
The agreement follows RUSAL's recent comprehensive program designed to reduce costs, optimize the production process, cut production costs and increase the overall efficiency of the business. The program will further enhance RUSAL's competitiveness and support the sustainability of the group's operations during the global economic downturn.
"We are pleased that our lenders have endorsed our pro-active steps to address the exceptional trading conditions and the current global economic crisis. The agreement highlights the long-term support that exists for RUSAL amongst the international banks and the Russian financial community and demonstrates the constructive nature of the ongoing negotiations between RUSAL and its lenders," said Oleg Deripaska, the CEO of RUSAL.
A source at one of the banks told Interfax that the consent of most syndicate members needed for an agreement to be signed was obtained around noon London time, however this was not a final agreement.
"It is a standstill, to give time to discuss how to emerge from this situation. It's not really a victory, but just the beginning of the process. We're talking about deferring for a matter of months," the source said.
A source in banking circles said the final agreement had not been signed. "Even when it is signed the company will have to meet certain conditions for it to take effect. The talks are ongoing," said the source, who declined to disclose the list of demands. The source said the company paid its latest loan installment on MarchAa10.
Swap for equity
Some or all of the $7-billion debt owed by Oleg Deripaska's United Company RUSAL (UC RUSAL) to Russian state banks could be swapped for equity, Russian presidential economics aide Arkady Dvorkovich told the Wall Street Journal.
This is among the options under consideration, Dvorkovich told the paper.
Dvorkovich told the paper the Russian government is was waiting for RUSAL to work out a deal with its foreign creditors - who granted a two-month grace period for negotiations on $7 billion that RUSAL owes them on March 6 - before determining what do with the additional $7 billion RUSAL owes to Russian state banks.
Dvorkovich reiterated that nationalization was not one of the government anti-crisis program's goals. "The authorities don't have any plans to take things away from people and nationalize them," Dvorkovich told the paper. "But that doesn't mean that one shareholder can't sell to another investor. It doesn't mean that the state won't wind up owning some assets that were held as collateral," the paper quoted him as saying.
Dvorkovich told the WSJ he thought RUSAL was one of the companies that ought to be able to restructure their debts and their businesses and emerge from the crisis since it has some of the lowest production costs in the world.
Oleg Deripaska is RUSAL's main beneficiary. The minority shareholders are Mikhail Prokhorov, the shareholders of Siberian-Urals Aluminum Company (SUAL) and Switzerland's Glencore. RUSAL was one of the first companies to take advantage of the opportunity to refinance loans via Russian Bank for Development and Foreign Economic Affairs (Vnesheconombank, VEB) in the autumn.
The aluminum giant raised a 12-month loan of $4.5 billion to pay off a western bank loan, used to buy a blocking stake in MMC Norilsk Nickel. VEB now holds that stake as security for its own loan to RUSAL.
The refinancing mechanism via VEB has now been frozen, however companies have still managed to draw just under half of the $50 billion set aside for these purposes. The government is now urging banks and companies to resolve their own debt problems, or arrange restructuring deals with creditors.
Deripaska has said one way of restructuring RUSAL's debt might be to issue bonds convertible for shares in the aluminum giant.
State as shareholder?
Meanwhile, the state could become a shareholder in United Company RUSAL (UC RUSAL) and other major companies...
|
