UPDATE 2-Aluminium giant RUSAL's chairman quits, alleges "deep crisis"

The billionaire chairman of Russia's RUSAL Plc has quit, saying the firm faces a "deep crisis" and triggering a halt to trade in shares of the world's largest aluminium maker.

Chairman Viktor Vekselberg, a Russian billionaire with an indirect stake in the Hong Kong-listed company, said in announcing his departure that RUSAL had become mired in debt.

"It is with great regret that I have to state that, due to the actions of its management, UC Rusal is presently facing a deep crisis as a result of which UC Rusal has in my opinion deteriorated from an international aluminum leader into a company overburdened with debt and entangled in numerous lawsuits and social conflicts," he said in a statement.

RUSAL immediately shot back on Tuesday, calling a temporary halt to trade in its stock and issuing its own statement, accusing Vekselberg of failing to fulfil the role of chairman and implying that he would have been removed in any case.

"Vekselberg had failed to perform his functions as a public company board chairman over the past 12 months," it said, noting that he had not attended a board meeting since February 2011.

"In this respect, the decision of Mr Vekselberg to resign as chairman of the board pre-empted the planned decision of the board," RUSAL added in its statement to the Hong Kong exchange.

RUSAL said the board would meet on Friday to appoint an independent director to replace Vekselberg, who had posted his announcement dated March 12 on the Web site of Renova Group, his investment holding group and a strategic investor in RUSAL.

The Renova statement also said Vekselberg had disagreed with a number of decisions related to RUSAL's strategic development and modernisation of production and human resources policies.

Shares in RUSAL fell 1.3 percent to HK$6.12 on Tuesday morning before being suspended, lagging a 0.8 percent gain in the benchmark Hong Kong index.

Due to report its latest earnings report on March 19, RUSAL posted a net profit of $432 million for the three months ended September, beating an average forecast of $409 million from 10 analysts polled by Reuters, on lower costs.

Analysts have flagged concerns over the debt burden of RUSAL, which is controlled by billionaire chief executive Oleg Deripaska.

Last year, there were media reports in Russia that Deripaska and Vekselberg differed over whether RUSAL should sell its stake in Norilsk Nickel to resolve a long-running dispute between the two companies. RUSAL had clashed with Norilsk over the latter's strategy and management but rejected a Norilsk offer last year to buy back some of RUSAL's stake -- despite RUSAL being under pressure to sort out its own debt burden.

"We think that with concerns over its ability to service its debt load and meet its debt covenants given the currently weak aluminium prices, its shares will continue to face pressure in the near term," BOC International said in a research note in January.

"RUSAL could fail to meet debt covenants in 2012 if the current aluminium price weakness persists. We estimate that for RUSAL to avoid breaking debt covenants, the aluminium spot needs to stay above US$2,400/t in 2012."

Aluminium prices now stand at around US$2,229.

RUSAL completed its US$9.33 billion debt refinancing in September 2011 with Russian and international banks. It is no longer bound by an international override agreement signed with lenders before its IPO, allowing it to make acquisitions and pay dividends, BOC International said.

Rusal said that at the end of September its net debt stood at US$10.91 billion.