* Loss-making Rusal has net debt of about $10 billion
* Aluminium price has slid nearly 50 pct since 2008
* Debt to be repaid over 20-30 years if prices remain low
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By Dmitry Zhdannikov
DAVOS, Switzerland, Jan 24 Russian state lender
Sberbank is negotiating with loss-making aluminium
group Rusal on a debt restructuring deal to help the
company weather low aluminium prices, two banking sources told
Reuters on Friday.
United Company Rusal, the world's biggest
producer of the metal used in transport and packaging, has been
hit by weak aluminium prices and its heavy net debt levels of
around $10 billion.
"The model has been broadly agreed... We cannot afford the
world's largest producer to fail," one of the sources said.
Rusal declined to comment. Sberbank could not be reached for
The price of aluminium has shed nearly 50 percent since
2008, forcing loss-making companies to slash capacity in recent
years and causing some smelters to close down completely.
In 2010, Sberbank took on a loan made by the state to Rusal
during the financial crisis. It is now worth around $4.6 billion
and matures in September 2016.
The loan is secured against Rusal's stake in Russia's
Norilsk Nickel, the world's leading miner of nickel
"If aluminium prices remain low, the debt is to be repaid
over 20-30 years; if they go up, then the cash flows will allow
Rusal to redeem everything within five years," he added.
The benchmark aluminium price on the London Metal
Exchange fell 13 percent in 2013 and has shed nearly 2 percent
so far in January, trading at $1,765 a tonne on Friday morning.
The slide in prices forced Rusal to cut production by
325,000 tonnes in 2013 and it plans to cut a further 325,000
tonnes in 2014. In total, this amounts to a 15 percent cut from
its 2012 output.
Rusal posted a recurring net loss of $132 million in the
third quarter, after a recurring net loss of $208 million in the
previous quarter. Recurring net profit is defined as adjusted
net profit plus the company's net effective share in Russian
miner Norilsk Nickel.
Rusal has a primary listing in Hong Kong and secondary
listings in Paris and Moscow.
(Reporting by Dmitry Zhdannikov; additional reporting by Polina
Devitt in Moscow and Eric Onstad in London; editing by Elizabeth
Piper and Stephen Powell)