Argentina's Aluar seeks $250 mln to manage debt

BUENOS AIRES, April 30 (Reuters) - The board of directors at Argentina's biggest aluminum maker Aluar approved a capital increase of up to $250 million to cut debt and continue a plant expansion, the company's chief executive said on Thursday. Aluar is one of a raft of firms in which the state pension administrator, Anses, has a stake after the government took over the private pension system last year. But unlike some other companies, Aluar welcomes the state's presence and hopes Anses will contribute to its planned capital increase. "We view the state's participation in finding solutions to this crisis with great interest. If they contribute capital like the rest of the shareholders, that would be excellent," Javier Madanes, CEO of Aluar, told Reuters by telephone. Anses has a roughly 10 percent stake in Aluar, meaning it would have to contribute about $25 million to maintain that percentage if the entire capital increase went forward. Aluar's board has not set the timing of a share offer and Madanes said Anses is not obligated to participate. Late last year, the government nationalized the country's private pension funds, many of which held stakes in some of Argentina's biggest companies, including Aluar. The pension takeover effectively gave the government stakes in the firms. Aluar produces some 410,000 tonnes a year of primary aluminum, its current maximum capacity, and exports about 80 percent. Production and employment at the plant have remained stable, despite plunging aluminum prices. The company originally planned to expand its plant in the southern city of Puerto Madryn to a capacity of 520,000 tonnes by mid-2010, but the impact of the global economic crisis on commodities prices threw a wrench in the project. Madanes said Aluar now aims to spend $100 million to boost annual capacity to 460,000 tonnes by late 2010. Another $200 million would be needed to reach the 520,000 tonnes, and for now no specific target date is set. "We are being prudent ... but if the global crisis takes a surprisingly favorable turn, we will move quickly on the expansion to 520,000 tonnes," he said. The company has about $800 million in debt -- used largely to finance nearly $1.2 billion in investments in the last five years -- and Madanes said it would use the capital increase to pay maturing debt rather than refinance it, given the scarcity and high cost of credit. The company could also issue around $50 million in new debt this year to finance the next phase of the plant expansion, Madanes said. Aluar's shareholders approved a program to issue up to $300 million in corporate bonds earlier this year. The company's board on Wednesday approved the capital increase, which will be discussed at a June 4 shareholders' meeting. Madanes, whose family owns about 70 percent of Aluar, said he was certain the plan would be ratified.