RUSAL has 7 weeks to convince banks on debt

MOSCOW/LONDON, July 30 (Reuters) - Russian magnate Oleg Deripaska's aluminium firm RUSAL has yet to convince some banks to accept restructuring terms on $7.3 billion of debts after winning support to extended the deadline for talks to September. Banking sources told Reuters that 75 percent of creditors agreed to extend UC RUSAL's deadline for restructuring until Sept. 18 after a draft proposal was presented in full for the first time in Paris on Wednesday evening.

"What has yet to be fully sold is the restructuring proposal itself," one source said on condition of anonymity. "Reaction to this was mixed, not least because there is a lot there."

UC RUSAL, controlled by Deripaska, drew up the proposal last week with the co-ordinating committee of creditors.

But some of the 70 banks involved in talks are not on the committee and saw the proposal for the first time only a day before meeting in Paris, the source said.

"There are a sizeable number of banks who remain to be convinced and that will be the work of the next days and weeks," the source said.

Foreign lenders, wary of Russia's investment climate, are reluctant to inherit assets in lieu of repayment and view a successful conclusion to RUSAL's restructuring talks as a gauge for Moscow's ability to manage its $475 billion foreign debt. Deripaska's fortune, the biggest in Russia a year ago, has been shredded by the sharp decline in commodity prices that left the country's billionaires badly exposed to loans taken out when markets peaked.

Creditor bank sources told Reuters on Tuesday the proposed deal with UC RUSAL obliges the aluminium company to sell its one-quarter stake in mining giant Norilsk Nickel (GMKN.MM) to cover debts to state banks, including $4.5 billion owed to VEB. The sale will be triggered by a price formula in a deal that also requires UC RUSAL to pay a minimum $7.5 billion over four years to Russian and foreign creditors. The repayment period could be extended to seven years. [ID:nLS604685]

Two other sources with knowledge of the Paris meeting said the proposal had received a positive reception among creditors, though more paperwork would be required to finalise a deal.

"The conditions were approved and there were no differences of opinion. The creditors supported it," said one.

UC RUSAL has declined to comment on the matter. The company has amassed total debts of $16.8 billion and its proposed restructuring deal is also tied to the price of aluminium on the London Metal Exchange. (Reporting by Oksana Kobzeva and Polina Devitt in Moscow and Christopher Mangham in London, writing by Robin Paxton)