BUSINESS

Deripaska Seeks Bank Support

By Torrey Clark

Bloomberg

Bloomberg Medvedev (r) and Deripaska, pictured here last year, were in agreement on Friday.

MOSCOW — Oleg Deripaska, the billionaire whose debts unseated him as Russia’s richest man, said he hopes banks will agree to a moratorium on loans coming due for his aluminum producer, United Co. RusAl, within a month.

“Banks understand the value of our debt today is less than four percent, so they hope to increase it a little,” Deripaska said in an interview with state television channel Vesti on Sunday.

“There’s the issue of balance. I hope by the end of February or beginning of March we’ll reach an agreement with them.”

Moscow-based United Co. RusAl owes about $7 billion to foreign banks, out of a total $16.3 billion of debt, minority shareholder Viktor Vekselberg said Jan. 30. Aluminum prices have continued to slide after a 36 percent drop in 2008, while stockpiles in warehouses monitored by the London Metal Exchange rose to a record high. Deripaska estimated global stockpiles have reached five million tons, more than RusAl produced last year.

Restructuring talks may take three to four months after banks agree to a “standstill,” Deripaska said. RusAl will have to rely on domestic banks and sales for funding, as international lenders and export revenues remain out of reach, he said.

“For the next seven years, we can forget about those sources,” Deripaska said. Russia’s government won’t provide much additional financial aid to companies, including his automaker GAZ, as it focuses on social issues, he said. “There won’t be much money.”

Deripaska called for the government to help stimulate demand and help producers compete on price. Deripaska said he doesn’t need state financing, Interfax reported.

RusAl has received “unprecedented support,” Interfax cited Deputy Prime Minister Igor Sechin as saying on Friday. “There is shareholder responsibility — let them show their savvy, ingenuity, commitment.”

Deripaska, 41, tumbled from first to eighth richest with a fortune of $4.9 billion after losing more than $35 billion, Finans magazine said last week. He was the first of Russia’s billionaires to cede assets to banks last year as credit markets seized up and the country was pushed to the brink of recession after a decade of uninterrupted growth.

RusAl held on to a 25 percent stake in Norilsk Nickel after a $4.5 billion bailout loan from state development bank VEB. The stake’s market value has fallen to about $2.1 billion, based on the nickel producer’s share price, from $13 billion when RusAl bought the stock in April.

President Dmitry Medvedev on Friday threw his support behind Deripaska, saying he agreed with the billionaire’s complaints about rivals using the crisis to “settle scores.”

“We shouldn’t allow problems to reach the point when, as a result of competition, whole groups of companies could collapse,” Medvedev said in Irkutsk, the capital of the region where RusAl’s Bratsk aluminum smelter is located.

Deripaska said Sunday that RusAl may consider selling convertible bonds once a moratorium is reached with banks. RusAl isn’t planning to sell shares, he said.

Deripaska and rival Norilsk shareholder Vladimir Potanin have proposed various plans to merge the nickel producer with other metals companies, possibly including RusAl and state-held metal assets, and giving the government a stake as a way to reduce their debt burden.

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