UC RUSAL plans to go public; to raise $2.6 billion
UC RUSAL plans to raise up to $2.6 billion in a landmark
The world’s largest aluminum maker on Thursday unveiled a 1,141-page prospectus for the first
“The valuation appears to be very aggressive,” said Chris Weafer, chief strategist at
UC RUSAL is the jewel in the crown of Deripaska’s business empire and helped its majority owner to the head of
UC RUSAL is offering 1.6 billion shares, or a stake of about 10 percent, in a range of HK$9.10 to HK$12.50. The January 27 listing will be among the first major IPOs of a non-Asian firm in
The company spent most of this year in talks with creditors to secure
“A valuation closer to $1.5 billion for that stake had been considered by many potential investors as more appropriate,” said Weafer.
The offer price values UC RUSAL at 11 to 14 times 2010 basis EV/EBITDA and means the company values itself at upto $26 billion.
Aluminum Corp of China Ltd trades at about 12 times, a source close to the deal said. Another major aluminum producer, U.S.-based Alcoa (
The IPO has attracted a list of big name investors, including Nathaniel Rothschild’s company and U.S. hedge fund Paulson & Co, but has not been without hiccups.
It was delayed by
UC RUSAL said its debt obligations would also impose “strict limits” on capital expenditure and dividend payments.
RUSAL revealed an $868 million net loss for the six months ended June 30 versus a year-earlier profit of $1.41 billion and said growth in aluminum prices would be crucial to recovery.
It cited a base case average forecast of an 8.6 percent annual rise in aluminum prices between 2009 and 2013. But should prices undergo a sustained fall of more than 20 percent, RUSAL’s ability to meet debt targets could be compromised.
The third page of the prospectus carried a warning in red ink that RUSAL may cease to continue as a going concern should it fail to comply with repayment terms or be unable to extend, refinance or repay a $4.5 billion loan from state bank VEB.
The VEB loan, which comes due on October 29, 2010, was one of the key concerns cited by
VEB, which has pledged to buy about one third of the shares on offer at the IPO, has security over RUSAL’s stake in
RUSAL’s 2008 revenues were $15.69 billion, up over $2 billion from the previous year. Revenues by mid-year 2009 were $3.76 billion, compared with $8.35 billion a year earlier.
The prospectus also addressed issues surrounding Deripaska, who confirmed he had been denied a U.S. visa on several occasions but had subsequently visited the country, most recently in August and October 2009.
RUSAL said Deripaska, its chief executive, had informed the company he was not, to the best of his knowledge, under investigation by any U.S. authority.
Deripaska also said he “strongly denies and will vigorously resist” claims by Michael Cherney, who has brought a London court case against his former associate related to payment for his interest in aluminum assets now controlled by UC RUSAL.
While Deripaska opposes the claim, UC RUSAL acknowledged its majority owner’s influence would be significantly reduced should he lose the case and use UC RUSAL shares to fund the payment.
Deripaska’s En+ Group owns 53.35 percent of UC RUSAL and its share is expected to drop to 47.59 percent after the IPO.
UC RUSAL plans to start pre-marketing of the IPO on January 5, with a roadshow starting on January 11 and pricing on January 21-22.