UPDATE 2-Russia's RUSAL to cut output after 2012 loss
* Full-year loss of $55 mln in 2012
* 2013 output to shrink 7 pct
* Newspaper reports seeking to refinance $4.5 bln loan
* Banking sources say refinancing deal unlikely (Adds company reaction to refinancing report, paras 15-16)
By Alessandra Prentice
MOSCOW, March 4 (Reuters) - Russia's United Company RUSAL Plc, the world's largest aluminium producer, reported a net loss of $55 million for 2012 and said it would shrink output for at least three years to curb market oversupply.
Shares in Hong Kong-listed RUSAL slipped by 3.4 percent on Monday amid concerns that weak demand will make it tough for Oleg Deripaska, the company's chief executive and main shareholder, to support its $10.8 billion debt load.
RUSAL borrowed to help pay for a $14 billion purchase of a one-quarter stake in Arctic mining giant Norilsk Nickel . The deal preceded the 2008 market crash, which killed Deripaska's hopes of a Russian metals and mining mega-merger.
The Norilsk stake is now valued at $8.3 billion, the equivalent of RUSAL's entire market capitalisation, which has fallen by more than 60 percent since it floated in early 2010. That means investors view RUSAL's core aluminium business as worthless from an equity standpoint.
RUSAL reported a 63 percent fall in earnings before taxes, interest, depreciation and amortisation (EBITDA) to $915 million in 2012.
"Negative investor sentiment led to LME prices for aluminium decreasing by 15.7 percent year-on-year, taking a large share of the global production capacity to or below breakeven level," Deripaska said in a statement.
On a conference call, executives said they planned to slash output by 300,000 tonnes this year and maintain the lower annual output until at least 2015 in an effort to combat overcapacity in the market.
RUSAL, which accounted for 9 percent of global aluminium and alumina production in 2011, produced 4.17 million tonnes of aluminium in 2012, little changed from the previous year.
The company's accounts showed that it made little headway in reducing net debt, which fell by 2 percent over the course of 2012.
RUSAL told investors it needed to raise only $500 million on the debt market in 2013, having already extended the maturity of many of its loans.
The Kommersant daily reported separately on Monday, however, that RUSAL was also seeking to refinance a big loan to ease its debt costs.
Citing sources, it said RUSAL might transfer its stake in Norilsk to Cyprus as part of efforts to refinance through Western banks the $4.5 billion it owes to Sberbank.
The Norilsk stake provides security for the loan, which the Russian state bank assumed after a debt restructuring at RUSAL following the 2008 crash.
A source familiar with the company's plans said RUSAL was in talks with Western banks.
RUSAL said it had "repeatedly considered" the possibility of transferring the stake outside of Russia but did not give further details of its current plans when contacted by Reuters.
Sberbank declined to comment on the report, but a source close to the situation said it was unlikely RUSAL would be able to raise the funds in the West. "Given the price of aluminium and (RUSAL's) earnings to debt ratio, I doubt RUSAL can attract that much money," he said.
The slide in RUSAL's share price, down by 18 percent since January, means that its equity market capitalisation of $8.3 billion at Monday's Hong Kong close was significantly below its net debt.
RUSAL assigned a carrying value of $10.2 billion to the Norilsk stake in its 2012 accounts, well above the market value of $8.9 billion at the end of the year.
As part of an ownership restructuring at Norilsk, under which Chelsea soccer club owner Roman Abramovich will come in as a minority shareholder, RUSAL will sell a Norilsk stake worth $620 million.
RUSAL said, however, that it would not mark down the value of the entire Norilsk holding to reflect the valuation at which the stake sale will go through, saying the investment was strategic and it would continue to be valued at historic cost. (Additional reporting by Twinnie Siu in Hong Kong and Oksana Kobzeva and Andrey Kuzmin in Moscow; Editing by Douglas Busvine and Jane Baird)
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