Rusal completes Hong Kong offering, starts trading Wednesday

Finance

United Company Rusal Ltd, the world’s largest aluminium producer, says it expects net proceeds of HK$16.7 billion (US$2.2 billion) in its Hong Kong IPOm with trading starting on Wednesday, January 27.

The company sold 1.6 billion shares at HK$10.80/share, resulting in a public float of 10.6%, which could potentially increase to almost 12% if an over-allotment option is fully exercised.

The three largest subscribers to the IPO are Vnesheconombank, the financial institution controlled by the Russian government (with a 3.15% stake), Nathaniel Rothschild's investment vehicle, NR Investments Ltd (0.48%) and hedge fund manager, Paulson & Co (0.47%).

The company had applied to the Hong Kong Stock Exchange to have the minimum free-float requirements of 25% waivered. However, the company says it will have 233 shareholders following the raising, meaning that no application is necessary as it exceeds the minimum shareholder requirement (of 100).

In 2008, Rusal produced 4.4Mt of aluminium and 11.2Mt of alumina. The company accounted for almost 12% of global output of aluminium and 13% of the world’s alumina production.

The company had debt of US$14.9 billion at the end 2009. According to the prospectus, a restructuring has extended the maturity of a large portion of the group’s debt obligations until 2013. However US$4.5 billion of the debt falls due to Vnesheconombank in October.

“The group intends to use all of the net proceeds received from the global offering immediately to reduce outstanding debt and to satisfy other obligations to its creditors,” says the prospectus.