UC Rusal has warned of potential technical default in relations to certain credit obligations of the group in the announcement published on Hong Kong stock exchange.

The Company assesses that the OFAC Sanctions may result in technical defaults in
relation to certain credit obligations of the Group, and the Company is currently
evaluating the impact (if any) of such technical defaults on the financial position of
the Group.

Company’s initial assessment is that it is highly likely that the impact may be materially adverse to the business and prospects of the Group

Shares in Rusal, one of the world’s largest aluminum producers, fell to HK$2.70 in late morning trade, its lowest since October 2016. That compared with 1.76 percent rise in the benchmark Hang Seng index.

“Investors were rushing to square their position or doing what they need to do with their exposure to the stock and to those shares which are sanction and trade war sensitive,” said Steven Leung, a sales director at UOB Kay Hian.

A Hong Kong-based equity sales director said on Monday the stock prices are under pressure because the sanctions require investors subject to U.S. jurisdiction to ditch the stocks within a month.

The U.S. Treasury Department said investors have until May 7 “to divest or transfer debt, equity, or other holdings” in EN+, Rusal and Russian vehicle maker GAZ

 

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angry bonds
Guest

Rusal business will now be divided by geography. Assets in Russia and the CIS will not go anywhere, but foreign projects (Australia, Guinea, Suriname, etc.) will all be either sold or confiscated by creditors.

angry bonds
Guest

The alliance with Alcoa will fall apart and this will lead to the decline of Alcoa itself, for which Rusal acted as a raw material appendage (supplies pigs) and which, by the way, owns two plants in Russia: SMZ and BKMPO, which Rusal sold to it in 2005. These factories will change owners (possibly in the form of asset swaps). More importantly the competition in the sector will rise and Alcoa’s profitability will fall, as Rusal will no longer restricted by the current agreements with Alcoa which prevent it from producing higher-value products.

Gunnamatta
Editor
Theres a few impacts if Rusal comes apart here. Inside Russia you have the machinations at Norilsk Nickel (Potanin will be having a laugh), and it is easy to imagine that a major state buy in (or maybe another state organised oligarch buy in) to Rusal or any significant part of its assets starts to place pressure on Deripaska. Outside Russia Rusal is a company with some global assets which might find interesting buyers, although many of them (eg Queensland Aluminium) seem to be minor stakes with mega level partners, which may not be easily saleable in an environment where… Read more »
Boilerroom
Guest

Is Kremin going to buy out Rusal? That is the question

Gunnamatta
Editor

I dont reckon the Kremlin would buy it outright – I wouldnt have thought aluminium was that strategic – but it may be a handy pie to divide up, if Oleg D is expendable. They would want politically reliable owners. Maybe a chance for a ‘strategic’ deal with the Chinese?

The bigger issue starts to look like (to mine eyes) what degree Russia embraces a degree of autarky/protectionism – noting that the rest of the world is starting to get a bit of a taste for it too.