Rusal seeks debt deal to escape possible default

Rusal, the world's largest aluminium producer, could default on some of its multi-billion dollar debt if it fails to reach a new deal with creditors by Monday, it said after reporting its biggest annual loss since 2008.

The company's earnings have been hammered by low aluminium prices, which in 2013 fell back to levels last seen in the aftermath of the financial crisis.

Rusal won a court ruling against the London Metal Exchange (LME) on Thursday derailing plans that could have depressed prices further by bringing more metal currently tied up in warehouses on to the market.

Yet the market remains oversupplied, weighing on price expectations - and Rusal, with a net debt of $10.1 billion, is one of the most indebted Russian metals and mining firms.

The company has entered into negotiations with lenders to amend the terms of syndicated facilities amounting to $3.7 billion of debt in order to defer repayments and modify covenants, Rusal said in its 2013 earnings report on Friday.

"Management does not expect to complete these negotiations before 31 March 2014, which is when the financial covenants will be next tested and a breach of certain existing financial covenants will result unless a waiver is obtained from the syndicate beforehand," the company added.

If Rusal is unable to renegotiate terms, the lenders could declare a default and trigger cross default provisions in its other recently renegotiated loan facilities, the company said.

Rusal did not say which renegotiated facilities a cross default could affect. It recently completed restructuring negotiations with state lender Sberbank on $4.9 billion of debt and Gazprombank on $660 million.