UPDATE 1-Rusal says expects to reach agreement with banks on $3.6 bln debt

Mon May 12, 2014 2:06am EDT

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HONG KONG May 12 (Reuters) - Aluminium giant United Company Rusal Plc said it expects to reach an agreement with lenders soon to revise the terms of its $3.6 billion syndicated debt, as it struggles to repay its loans amid depressed aluminium prices.

The loss-making company also called on major producers, including in China, to cut aluminium output to aid a recovery in prices.

The world's biggest aluminium producer won a deal with lenders in April to defer the repayment dates of syndicated facilities by three months until July 7.

"We are currently finalising the terms with the remaining banks and we hope to close the deal in the next couple of months," Deputy CEO Oleg Mukhamedshin told reporters in Hong Kong, where the company has its primary listing, after its annual meeting.

Rusal, which in March reported its second annual loss in a row, has cut production and is working with lenders to delay loan repayment dates in an effort to meet loan repayments.

Rusal had net debt of $10.1 billion as of the end of last year. It repaid some bondholders in March and has reached an agreement with Russian lenders including Sberbank, VTB and Gazprombank, to refinance about 70 percent of the amount, Mukhamedshin said.

Completion of refinancing will allow Rusal to maintain a sustainable cash position in anticipation of market rebound, the firm said in March.

Shares in Rusal slipped 0.6 percent in Hong Kong trading by 0412 GMT, lagging a 1.7 percent gain in the benchmark Hang Seng Index.

Rusal said global aluminium prices remain under pressure and urged big produrcers to cut output until prices recover.

Rising capacity at aluminium plants in China, which account for almost half of world output, has led to a global oversupply and weighed down prices.

"We believe that the key strategy for aluminum is to be very cautious on supply, and I think this equation and lesson should be taken by mainland producers because what they suffer now - this dramatic fall in prices - reflects the supply inside China," CEO Oleg Deripaska said, adding that Rusal's 2014 aluminium exports will fall from last year.

Rusal also reiterated support for CME Group Inc's new aluminum contract, adding that the company will use it as a hedging tool.

CME launched a North American aluminum-futures contract this month, returning to the market after a four-year absence and ramping up competition with the London Metal Exchange.

(Reporting by Clare Baldwin; Writing by Fayen Wong; Editing by Richard Pullin)

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