Deripaska’s Rusal falls 35% as firm flags potential defaults

FILE PHOTO: Russian tycoon and President of RUSAL Oleg Deripaska listens during the "Regions in Transformation: Eurasia" event in Davos, Switzerland January 22, 2015. REUTERS

SHANGHAI: United Co. Rusal, the biggest aluminum producer outside China, flagged the prospect of debt defaults and “materially adverse” consequences for the company after the U.S. imposed sanctions on the firm and its billionaire owner Oleg Deripaska. 

The shares plunged 35 percent in Hong Kong.

The company is reeling after the U.S. Treasury on Friday included Rusal and seven other Deripaska-linked firms in a list of 12 Russian companies hit with sanctions. The measures could hurt Rusal’s access to global financial markets and disrupt its relationship with suppliers and buyers. 

The sanctions may result in technical defaults on some credit obligations, Rusal said in a statement Monday that flagged a possible delay to its annual report for 2017.
     
The impact of sanctions “may be materially adverse to the business and prospects of the group,” Rusal said. “The company’s primary focus remains its business and, most importantly, all of its global customers, investors and partners. As a global business that engages with companies in different markets, the company will continue to ensure it abides by all applicable laws and regulations.”
     
Rusal shares slumped to HK$3.00 in Hong Kong, according to pricing from the Hong Kong Exchanges & Clearing Ltd. website.

Aluminum surged on the London Metal Exchange as investors bet on supply disruptions, gaining as much as 2.3 percent on Monday.
     
The U.S. measures directly target Russian oligarchs whose companies have wide-ranging involvement in international capital markets. 

Treasury Secretary Steven Mnuchin said in a statement that the sanctions were intended to punish Russia for a range of actions including occupying Crimea, instigating violence in Ukraine and attempting to subvert Western democracies.
     
Russia’s Foreign Ministry is working on measures to respond to the latest U.S. sanctions, ministry spokeswoman Maria Zakharova said on state television channel Rossia 1, according to state news agency Tass. 

“We have a whole list of possible measures that are being studied,” Tass cited Zakharova as saying. - Bloomberg