The legal dispute between Russian aluminium group Rusal and one of its key lenders, Alfa Bank, is set to remain one of the major stumbling blocks in the restructuring of the company’s $14 billion debt pile, as negotiations with foreign and domestic creditors head into their third month.
Johann Jonach, chief executive Alfa Banking group, accused Rusal this week of dragging its feet in coming to a legal agreement over a loan to its subsidiaries.
“The legal proceedings are continuing,” Jonach told Emerging Markets. “Alfa Bank is interested in a constructive solution – but we have not seen a readiness to agree on the part of the borrower.”
Earlier this month, Russian newspapers reported that Rusal subsidiaries Rusal Sayanagorsk and Sual had applied to the Moscow arbitration court in an attempt to trigger a restructuring of loan extended by Alfa Bank, thought to total $800 million.
Rusal, which is majority-owned by chief executive Oleg Deripaska, is also engaged in the restructuring of a total of $14 billion of debt, $7.4 billion of which is help by foreign lenders. A standstill agreement reached in early March was extended this week until June 11.
Oleg Mukhamedshin, director of capital markets at Rusal, refused to comment on the details of its legal dispute with Alfa, only saying that the company was still negotiating with Alfa Bank.
“We are in the process of agreeing terms and conditions of our long-term restructuring and will report on the result as soon as it is achieved,” Mukhamedshin added yesterday in emailed comments to Emerging Markets.
Asked whether Rusal had proposed postponing debt payments for two years and linking them to aluminium prices on the London Metal Exchange – a move alleged by bankers close to the negotiations last week – Mukhamedshin added that it was too early to discuss the precise terms and conditions of the restructuring.
Alfa’s Jonach, meanwhile, said the bank was waiting for the outcome of Rusal’s negotiations with its foreign lenders.
Mukhamedshin also denied suggestion that the firm may have to part with its 25% plus one share in miner Norilsk Nickel to repay creditors, an option reportedly aired by Rusal’s chairman earlier this month. He said: “The stake on Norilsk Nickel is our strategic investment and we do not consider an option of selling it.”
Rusal’s foreign creditors remained largely unmoved by slow progress on the restructuring. “They had two months initially – but that’s the time it takes to put together a new loan when all the stars are aligned, so it’s hardly surprising that this will take longer,” said one senior London-based loans banker.
Other bankers described the discussions as mainly friendly and constructive, but highlighted the difficulty in presenting a plan amenable to a large number of creditors. The restructuring applies to more than 30 transactions, including syndicated and bilateral loan agreements, and involve more than 70 banks.
Mechel, another Russian mining firm, has until Friday to repay a $1.5 billion bridge loan from foreign banks, under an extension granted in March.