“Norilsk made a beneficial proposal to Rusal,” Prokhorov said yesterday in an e-mailed statement, adding that his Onexim Group will support the deal. “The situation has obviously come to a dead-end, so one of the parties should take the decision to sell.” Rusal, valued at about HK$198 billion （$25 billion） based on prices in Hong Kong, could increase to as much as $35 billion should it sell out of Norilsk, Prokhorov said Dec. 23. The billionaire owns 17 percent of the company.
Deripaska on Jan. 27 said he expects Norilsk’s market value to surge to at least $70 billion this year. That would boost the value of Rusal’s stake to $17.5 billion and add to a buyback’s cost. He also said Rusal’s debt will fall within four years.
“Debt will be so insignificant, it won’t be worth mentioning,” he said in an interview in Davos, Switzerland.
Rusal’s net borrowings fell to below $12 billion as of Sept. 30 after almost doubling to as much as $16.6 billion following the company’s purchase of Norilsk shares in 2008.
“Though many investors were first skeptical about Rusal, the company has been aggressively repaying its debt,” said Alexandre Starinsky, a fund manager at Atria Advisors Ltd. in Moscow, with $300 million in assets including Rusal IPO shares. “Rusal performed well due to rising aluminum prices and its cost leadership based on access to cheap electricity.”
Part of the attraction for investors is the potential for Rusal’s market valuation to begin to catch up with its peers should the company resolve the battle over Norilsk’s ownership.
“Rusal’s decision to stick with the Norilsk stake has been curbing its development,” Vladimir Zhukov, an analyst at Nomura International Inc., said in Moscow. “Some of its investors are questioning the rationale. Selling this stake would enable Rusal to eliminate completely its debt and unlock significant organic growth potential.”
Rusal trades at just over half the price-to-earnings ratio of Alcoa and Aluminum Corp. of China Ltd., the Russian company’s closest rival on the Hong Kong Stock Exchange, according to Deutsche Bank’s latest figures, sent by e-mail on Feb. 15.
The ratios, prepared before Norilsk’s most recent offer, were 20 times for Alumina Ltd., 18.6 times for India’s National Aluminium Co. and 13 times for Norsk Hydro ASA.
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