Rusal to raise up to US$4.75 billion for debt refinancing

UC Rusal announced that its Board of Directors has approved the main terms and conditions of a new pre-export finance facility in the amount of up to US$4.75 billion with a club of international lenders.

The facility proceeds will be primarily used to fully take out the outstanding debt under the International Override Agreement, entered into by the Company on 7 December 2009, and to repay Onexim liabilities. Any balance to be applied towards partial prepayment of the Russian facilities.

The facility matures in 60 months and will be repaid in quarterly installments commencing at the end of month 15.

Interest rate includes 3-month LIBOR plus margin. Margin will be reset quarterly in accordance with a margin adjustment mechanism calculated based on the ratio Total Net Debt / covenant EBITDA as per the following grid:

Total Net Debt/ covenant EBITDA             Margin (% per annum)
> 4.0                                                              2.85%
≤ 4.0 and > 3.5                                               2.60%
≤ 3.5 and > 3.0                                               2.35%
≤ 3.0 and > 2.5                                               2.10%
≤ 2.5                                                              1.75%

Following the first quarter 2011 financial results the Total Net Debt/ covenant EBITDA ratio is within the 3.0-3.5 range and matches the 2.35% per annum margin.

The transaction is subject to the banks’ relevant credit approvals.

‘The refinancing under the International Override Agreement enables the Company to remove restrictions, including over operational and investment activities, and accelerate dividends pay-out. We continue to actively work on decrease on our funding costs and on improvement of our capital structure. The banks willingness to ensure commitment for the deal is a confirmation of the high quality of Rusal's credit risk and shows the creditors’ confidence in the Company,’ said UC Rusal's Director for Financial Markets Oleg Mukhamedshin.