30 Jul 2009 13:59

Banks extend RUSAL standstill to Sept 18 - source

MOSCOW. July 30 (Interfax) - United Company RUSAL's creditor banks have approved extending the standstill order on the Russian aluminum giant's debt to September 18, a source in banking circles told Interfax.

"RUSAL's creditor banks approved extension of the standstill to September 18 at a meeting in Paris yesterday. They also discussed the key terms of the long-term restructuring deal reached by the creditors' committee and RUSAL. Overall the banks supported the agreement. This is a critical result of the talks. The next and final phase of the restructuring is agreeing the terms of the restructuring approved by the creditors' committee and RUSAL in the loan committees of the banks, which will require one or one and a half months," the source said.

"The banks familiarized themselves [with the plan] and on the whole supported the approach to the restructuring and are now beginning to discuss the details. The standstill has been extended, as expected, to September 18," another source familiar with progress in the talks said.

The restructuring schedule provides for a seven-year restructuring, a four-year extension and three years for refinancing.

"The interest rates will depend on the financial covenants, which will be tied to the borrower's business and to the economy. One of the key covenants concerns the ratio of debt to EBITDA, which must remain realistic under current conditions," a source at one of the banks represented on the creditors' committee said. He declined to specify the level of the debt burden.

RUSAL accepted the creditors' condition concerning the potential sale of its 25% stake in MMC Norilsk Nickel if the stake's market value rises to exceed the value of RUSAL's entire debt. The stake is currently held by Vnesheconombank (VEB) as loan security. "RUSAL views that condition as normal. They understand that the company has a lot of debt hanging over it. Everyone is seeking compromise," the source said.

Oleg Deripaska, RUSAL's chief beneficiary and general director, previously said that within a month after the conclusion of an agreement with the creditors' committee on the main terms of the restructuring, agreements would be signed with each of the creditor banks.

The coordinating committee held a presentation in Paris on Wednesday on the final plan for the long-term restructuring of RUSAL's debt.

The coordinating committee includes SMBC, ING, Calyon, BNP Paribas, Societe Generale, Unicredit Group, Natixis and Royal Bank of Scotland.