Listing panel delays decision on Rusal IPO

PUBLISHED : Friday, 27 November, 2009, 12:00am
UPDATED : Friday, 27 November, 2009, 12:00am

The listing committee of the Hong Kong stock exchange last night delayed making a decision on whether to approve the city's first potential Russian initial public offering.

A person involved in the deal said the Hong Kong Exchanges and Clearing indicated it would take a week before coming back with a decision on the application of Rusal.

'It's not unprecedented but it's unusual for the decision to be delayed in this way,' an exchange official said last night.

The committee's slot for discussing Rusal's application was between 4pm and 6pm yesterday but it was unable to resolve concerns over the completion of the restructuring of the company's US$16.8 billion debt, of which international banks are owed US$7.4 billion.

Bankers worked overnight to complete the restructuring. It is understood this was not completed. The person close to the deal said 98.5 per cent of Rusal's lenders, by US dollar value, had agreed the terms.

However, 'HKEx is being prudent about the loan restructuring' and wanted 100 per cent approval before giving the go-ahead, the person said.

Bank of America Merrill Lynch, BNP Paribas, BOC International, Credit Suisse and VTB Capital are the deal bookrunners. BNP and Credit Suisse are also the sponsors.

There is considerable pressure for the approval of Rusal's share offer. The exchange has been trying for some years to diversify away from its dependence on mainland listings. Rusal will be a test case for the exchange and, if successful, it is hoped other mining and energy firms from Russia and Kazakhstan will follow.

The committee's task in assessing the suitability of Rusal has not been easy, as it is the first Russian firm the panel has had to scrutinise, it has huge debts, and Rusal and its chief executive and biggest shareholder, Oleg Deripaska, are embroiled in major court cases.

Another area that is thought to have caused the committee concern is the extent of disclosure in the prospectus over Deripaska's court case in Britain. He is being sued by Michael Cherney, who says he is a former business partner, for the cash value of 13.2 per cent of Rusal and 20 per cent of another firm merged into the aluminium producer. Deripaska denies Cherney was a business partner or that he owes him money.

Vera Kurochkina, the head of communications at Rusal, said: 'The court case had nothing to do with Rusal. This is complete bull...t.'

But the London judge said: 'I am satisfied Mr Cherney has a reasonable prospect of success in respect of his claim.' Deripaska described Cherney's claim as 'total crap'.

Another area of concern has been that Deripaska had been refused a visa to the US for his alleged connection to organised crime.

Rusal is also in dispute with the government of Guinea over the ownership of the Friguia refinery, which supplies a significant volume of alumina to Rusal's smelters.