Russian hydropower giant RusHydro may pay only $88 million in cash in installments for a 50% stake in the Taishet Aluminum Smelter with the rest of the sum to be paid with 42.75% in Irkutsk Power Grid Company and future dividends from the plant.
Construction of the smelter with a projected annual production capacity of 750,000 tons of aluminum started in the Irkutsk region in 2006, but was frozen in 2009 because of the global economic crisis. Previously, aluminum giant UC RUSAL offered hydropower giant RusHydro a 50% stake in the Taishet Aluminum Smelter in exchange for some debt of the smelter and a discount for power the hydropower giant will sell to it.
On August 3, RusHydro CEO Nikolai Shulginov said that the company was also negotiating a sale of 42.7% in Irkutsk Power Grid Company as part of participation in the Taishet Aluminum Smelter project.
Sources familiar with RUSAL’s proposal said that RusHydro might acquire 50% in a special purpose vehicle that would include assets of the Taishet Aluminum Smelter for $388 million. But the company will actually pay only $88 million in three years under an interest-free installment plan, while the 42.75% in Irkutsk Power Grid Company and cash flow of the smelter after the launch will cover the rest.
The price of the stake in Irkutsk Power Grid Company stands at $150 million, and RUSAL plans to issue a $150 million loan to the special purpose vehicle.
Shareholder of 54.72% in Irkutsk Power Grid Company is EuroSibEnergo, a part of RUSAL’s core owner En+ Group of Oleg Deripaska.
RUSAL has already invested more than $770 million in the project. Sources said that project financing necessary for the Taishet Aluminum Smelter fell to $940 million in April from $1.1 billion, and RusHydro is now more optimistic toward the project.
The position of the company is that the special purpose vehicle should not be burdened with new loans, and RUSAL would be unable to raise its stake in the smelter if the cost of the project increases. If the companies coordinate the plan, it will take them three months to work out details of the deal. (Prime/Ukrainian metal)