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Rusal sets sights on $2.6 billion Hong Kong IPO
Published: 31 December, 2009, 11:14
Edited: 03 January, 2010, 19:53
TAGS: Investment, Markets, Russia and the global economy, Finance
Russian aluminium producer, Rusal, is planning to raise as much as $2.6 billion in its Hong Kong listing according to its prospectus.
The company, which has recently negotiated a comprehensive debt restructuring deal with lenders, will sell 1.61 billion shares at a price between HK $9.10 and HK $12.50, equal to about 10.6% of the company, and valuing it at as high as $23.4 billion.
Seeking to repay an estimated $14.8 billion in debt, at a time the global aluminium market is suffering from falling demand and marked overcapacity, the prospectus shows that Rusal made a net loss of $868b million for 1H 2009, compared with a profit of $1.4 billion for 1H 2008, and forecast a net profit for this year ‘unlikely to be less than’ $434 million. Rusal has also indicated in the prospectus that it does not expect to pay dividends until 2013 as it meets debt commitments.
The IPO will see the stake of controlling shareholder, Oleg Deripaska, fall from 53.35% to 47.59%. Rusal has negotiated for four cornerstone investors who will buy 39% of the shares being made available, or 4.2% of Rusal. These investors include Vnesheconombank, which will buy 477 million shares, New York Hedge Fund Paulson & Co, which will invest $100 million, and investment magnates Nathaniel Rothschild, committed to $50 million, and Robert Kuok committed to $20 million.
The shares will be finally priced on January 22 and expected to commence trading on January 27, with Rusal indicating in its prospectus that the funds raised will be used to satisfy creditor obligations.
“The group intends to use all the net proceeds received from the global offering to immediately reduce outstanding debt and to satisfy other obligations to its creditors,”
The Hong Kong Securities and Futures Commission has placed a minimum investment threshold on the offering, limiting access to the IPO to those investors who can subscribe for at least HK $1 million, with subsequent trading in lots of HK $200,000. The IPO is expected to be the largest in Hong Kong in 22 months, and is the first listing by a Russian company there.
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This aluminum thing is starting to remind me of the potential LNG glut. I think that I recently read that Saudi Arabia and Alcoa have just signed a contract to construct a huge new aluminum manufacturing complex. I guess someone thinks that China is going to need a LOT of aluminum. We shall see. It sounds like a long term investment to me. Making aluminum is a very energy intensive process, so cheap electricity is the key to profit. Aluminum is one of the most cost effective things to recycle, because remelting scrap only uses 10% of the energy needed to make aluminum by tearing the aluminum atoms from the oxygen atoms, which are tightly bound in aluminum ore. If anyone can find a cheaper way to break that chemical bond, they will become richer than Warren Buffet, because aluminum is quite abundant, making up a lot of the Earth's crust. The most amazing thing about the metal is how it can be friction stir welded with a rotating tool. If I hadn't seen pictures of the process on the excellent NASA website, I would have bet anyone that such a thing was impossible. But the British managed to do it. The love of the aluminum atom for the oxygen atom does have one use which almost everyone enjoys-firecrackers. The explosion of a firecracker results from the recombination of aluminum atoms (in the form of a very fine aluminum powder called 'dark pyro' aluminum,) with the oxygen atoms present in molecules which easily release oxygen in large quantanties, such as potassium perchlorate(KClO4). When the firecracker explodes, some of the electrical energy that was used in breaking the oxygen-aluminum molecular bond is released as heat and light when the stable bond is again formed. The white smoke from a firecracker contains the stable aluminum oxide molecule. Teenage students like that chemistry demonstration as the white-hot fireball and blast are quite impressive. Now that I think about it, there are over a billion Chinese. Maybe they are planning a lot of celebrations.
is the white smoke an indication for a virus activation ?