Rusal to raise up to $2.6 billion in IPO

Debt-ridden UC Rusal, the world's largest aluminium and alumina producer, plans to raise as much as $2.6 billion in an initial public offer in Hong Kong - the first listing by a Russian company in Chinese territory - to pay a part of its $14.9 billion debt.

Rusal, based in Moscow and controlled by Russian billionaire Oleg Deripaska, said in a filing with the Hong Kong Stock Exchange yesterday that it plans to sell 1.61 billion shares at a range of HK$9.10 to HK$12.50 each ($1.17-$1.61).

It is offering about 10.6 per cent stake in the form of shares and global depositary receipts and the company hopes to raise between $1.88 billion and $2.6 billion.

Rusal, which holds an 11 per cent global market share in aluminium and a massive debt of $14.9 billion, said it planned to pay part of the debt from the entire proceeds of the IPO. The stock is slated to start trading on the Hong Kong Stock Exchange beginning 27 January.

"The group intends to use all the net proceeds received from the global offering to immediately reduce outstanding debt and to satisfy other obligations to its creditors," the company said in the statement.

Rusal said in its prospectus that four investors -Vnesheconombank, the Russian state development bank, Malaysian tycoon Kuok Hock Nien and companies controlled by him, the investment vehicle of Nathaniel Rothschild and New York-based investment company Paulson & Co - will buy HK$6.86 billion worth of shares in Rusal's IPO, which is 39.44 per cent of the shares, representing a stake of 4.20 per cent.