Indebted Russian aluminium company United Company RUSAL had no profit in the first quarter of 2009 and expects only a small profit for the year, board Chairman Viktor Vekselberg told Vedomosti daily on Thursday.
The No.1 aluminium producer showed a profit of near zero in 2008 and is in talks to restructure debts with foreign lenders after last month securing a two-month freeze on the $7.4 billion it owes to more than 70 international banks.
UC RUSAL has no profit for the moment. We were close to zero in the first quarter, although may have a small profit for the full year, Vekselberg, who owns a sizeable minority stake in UC RUSAL, told Vedomosti in an interview.
He also said Russian state bank VEB could issue bonds convertible into UC RUSAL shares to restructure the $4.5 billion the company owes it.
Another option for UC RUSAL, controlled by billionaire Oleg Deripaska, would be to sell the 25 percent stake in metals company Norilsk Nickel (GMKN.MM: Quote) that is pledged as collateral to VEB, Vekselberg said, adding that its value would rise as nickel prices bottom out.
We can just sell it and repay the debt, he said. There are those looking to buy it.
RUSAL denied it was thinking of selling the stake.
We consider the purchase of the Norilsk Nickel stake as a strategic investment and therefore have no plans of selling it, RUSAL spokeswoman Vera Kurochkina said.
UC RUSAL saved $554 million in the first quarter of 2009, half of its $1.1 billion target for the year, after launching a cost-cutting programme to combat a decline in aluminium prices.
The company's aluminium production fell 7.2 percent to 1.0 million tonnes in the first quarter. UC RUSAL plans to cut full-year 2009 output by 11 percent. [ID:nLL637986] (Writing by Gleb Bryanski and Olzhas Auyezov; editing by Karen Foster)
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