TFR Deal of the Year 2004: Rual Trade, Russia

Feature

posted 23 Feb 2005 in Volume 8 Issue 4

Rual Trade, Russia: A landmark for Russian aluminium

MLAs: BNP Paribas & Citibank London

Borrower: Rual Trade (Rusal)

Deal size: $800m

Legal adviser: Denton Wilde Sapte

Signing: 5 October 2004

Disbursement: 19 October 2004

Coming in at a time when things were toughening up in the Russian market due to problems with Yukos, this jumbo $800m pre-export credit facility for aluminium producer Rusal is something of a landmark deal.

Weighing in as the largest ever metals and mining syndicated loan for a Russian company, the transaction is also notable for having – as one market participant notes – “more mandated arrangers than you can point a stick at”.

BNP Paribas and Citigroup acted as co-ordinating mandated lead arrangers on the deal. Standard Bank London was offtake arrangement agent and Natexis Banques Populaires facility and document agent. Denton Wilde Sapte was legal adviser to the MLAs and the offtaker.

The transaction also boasts a five-year tenor, making it the longest maturity seen for a syndicated loan in the Russian non-ferrous metals and mining sector.

“The deal was well received in the market place, partly because of the offtake structure, which involved either banks or bank-owned metals companies,” says Geoffrey Wynne, partner at Denton Wilde Sapte in London.

Indeed, part of the deal’s success lies in some of the structuring techniques used. The transaction is based on special offtake arrangements with deliveries of aluminium to the offtakers, which are financial institutions as opposed to customary trader offtake arrangements. The borrower then repurchases the metal to sell to its customers and as a result is fully independent in carrying out its own sales strategy.

MLAs on the deal are ABN Amro, Barclays Capital, Bayerische Landesbank, BNP Paribas, Citibank London, Commerzbank, HSBC, ING Bank, Moscow Narodny Bank, Natexis Banques Populaires, Standard Bank London and UFJ Bank.

Also participating as lenders are ABN Amro, Barclays Capital, Bayerische Landesbank, BAWAG, BNP Paribas, Caterpillar Financial, Citibank, Commerzbank, Credit Suisse Trade Finance, DZ Bank, Erste Bank, HSBC, ING, KfW, Landesbank Rheinland-Pfalz, Moscow Narodny Bank, Natexis Banques Populaires, Ost-West Handelsbank, Raiffeisen Zentralbank Öesterreich, Rosbank, Standard Bank London, Sumitomo Mitsui Banking and UFJ Bank.

The facility’s security structure is based on the tolling contracts (concluded between Wainfleet and four Russia-based producers of aluminium), the delivery contract (between Wainfleet and Rual Trade), and the purchase contracts (between Rual and four offtakers). The security is created by way of assignment of the borrower’s rights under the delivery contract and the purchase contracts.