Russian aluminum giant RusAl has asked creditors for a twelve-month grace period on its principal loan repayment next year, as the company may be unable to service its debt if world aluminum prices continue falling, Vedomosti business daily said on Thursday.
"The company is discussing a more flexible approach to calculate covenants, including the introduction of a period when they are not tested," a source close to RusAl's shareholders told Vedomosti, adding however that the company had no problems with its debt service and interest payment.
RusAl's debt amounted to $11.47 billion as of September 30, 2011. In October, RusAl struck a deal with its creditors that included Sberbank, VTB Bank, Gazprombank, the Royal Bank of Scotland, ING, Nordea and Unicredit to restructure its gigantic liabilities.
This year, however, RusAl has to pay around $980 million in interest, Metropol investment company analyst Sergei Filchenkov said.
The aluminum giant faces great difficulties in its debt service as world aluminum prices have plunged by 28 percent from this year's record high on May 3 to $1,974 per ton, almost to the level of the company's production cost, currently at $2,000 per ton, he said.
Two banking sources in creditor banks told the paper that the creditors were unlikely to grant a grace period to the aluminum giant but could consider a lower interest rate on loan repayment.
