Rusal aims to raise US$2.6b in IPO
By Jeremiah Marquez |
January 1, 2010, Friday
|
Print Edition
Print Edition
RUSSIAN aluminum giant UC Rusal will try to raise as much as US$2.6 billion by selling shares listed in Hong Kong in late January to reduce its mountain of debt, the company said yesterday.
But the initial public offering will come with a host of restrictions on who can buy the shares and how they're traded, reflecting the concerns of regulators about Rusal's US$14.9 billion debt load.
The Hong Kong Stock Exchange warned potential buyers in Rusal's IPO prospectus published yesterday that investment in the shares "involves significant risk" and that "investors may lose part or all of the value of their investment."
Moscow-based Rusal - run by tycoon Oleg Deripaska - is seeking to sell more than 1.6 billion shares at a price between HK$12.50 (US$1.61) and HK$9.10, according to a filing with Hong Kong's stock exchange, with the potential proceeds ranging from US$1.9 billion to US$2.6 billion.
The company said it plans to use all proceeds to "reduce outstanding debt and to satisfy other obligations to its creditors."
The IPO has attracted controversy, with critics accusing regulators of undermining Hong Kong's credibility as an international financial center by allowing a company so heavily in debt to list. Hong Kong's stock exchange initially declined to approve the listing before reversing course.
Regulators seemed to strike a middle ground by limiting the IPO's buyers to "professional investors" or those willing to purchase at least HK$1 million in shares. To start, shares will only be traded in blocks of US$26,000.
The Hong Kong exchange said in the filing that Rusal does not meet the profit test to qualify for listing, but was allowed to float "on the basis of a large market capitalization, revenue of more than HK$500 million and positive cash flows" from its operations.
Earlier last year, Rusal announced a landmark deal to restructure its debt as it sought to go public in Hong Kong by the end of the year.
Under the terms of Rusal's restructuring deal, the company is not permitted to pay dividends unless its ratio of total net debt to earnings before interest, taxes, depreciation and amortization is 3 to 1 or less. As of June 30, the ratio stood at 47 to 1.
Rusal's pricing will take place on January 22 and it will be listed on January 27.
But the initial public offering will come with a host of restrictions on who can buy the shares and how they're traded, reflecting the concerns of regulators about Rusal's US$14.9 billion debt load.
The Hong Kong Stock Exchange warned potential buyers in Rusal's IPO prospectus published yesterday that investment in the shares "involves significant risk" and that "investors may lose part or all of the value of their investment."
Moscow-based Rusal - run by tycoon Oleg Deripaska - is seeking to sell more than 1.6 billion shares at a price between HK$12.50 (US$1.61) and HK$9.10, according to a filing with Hong Kong's stock exchange, with the potential proceeds ranging from US$1.9 billion to US$2.6 billion.
The company said it plans to use all proceeds to "reduce outstanding debt and to satisfy other obligations to its creditors."
The IPO has attracted controversy, with critics accusing regulators of undermining Hong Kong's credibility as an international financial center by allowing a company so heavily in debt to list. Hong Kong's stock exchange initially declined to approve the listing before reversing course.
Regulators seemed to strike a middle ground by limiting the IPO's buyers to "professional investors" or those willing to purchase at least HK$1 million in shares. To start, shares will only be traded in blocks of US$26,000.
The Hong Kong exchange said in the filing that Rusal does not meet the profit test to qualify for listing, but was allowed to float "on the basis of a large market capitalization, revenue of more than HK$500 million and positive cash flows" from its operations.
Earlier last year, Rusal announced a landmark deal to restructure its debt as it sought to go public in Hong Kong by the end of the year.
Under the terms of Rusal's restructuring deal, the company is not permitted to pay dividends unless its ratio of total net debt to earnings before interest, taxes, depreciation and amortization is 3 to 1 or less. As of June 30, the ratio stood at 47 to 1.
Rusal's pricing will take place on January 22 and it will be listed on January 27.
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