HONG KONG/MOSCOW (Reuters) - Russian billionaire Viktor Vekselberg quit on Tuesday as chairman of the world's largest aluminum producer, UC RUSAL , saying the heavily indebted company was in deep crisis after a long battle with fellow oligarch Oleg Deripaska.
The resignation tightens Deripaska's grip on RUSAL but the company faces a struggle to recover because of a fall in global aluminum prices and its large debt, acquired a stake in Norilsk Nickel
"I regret to say at this time that Rusal is in a deep crisis, caused by the actions of the management," said Vekselberg, listed by Forbes magazine as Russia's eighth-richest man with a fortune of $12.4 billion.
Shares in Rusal were suspended in Hong Kong after falling 1.3 percent to HK$6.12 on Tuesday morning, lagging a 0.8 percent gain in the benchmark Hong Kong index <.hsi>.
RUSAL called for the temporary halt to share trade and issued its own statement, accusing Vekselberg of failing to fulfill the role of chairman and indicating 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, adding 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 preempted the anticipated consideration of this matter by the Board," RUSAL added in its statement to the Hong Kong exchange.
Vekselberg, who has a 15.8 percent stake in the company along with his partners, had disagreed with billionaire and RUSAL chief executive Oleg Deripaska over selling the company's 25 percent stake in Norilsk Nickel.
Vekselberg, along with billionaire and fellow minority shareholder Mikhail Prokhorov, had supported the sale to help service the firm's multi-billion dollar debt.
"We think that with concerns over its ability to service its debt load and meet its debt covenants given the currently weak aluminum 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 aluminum price weakness persists. We estimate that for RUSAL to avoid breaking debt covenants, the aluminum spot needs to stay above US$2,400/t in 2012."
RUSAL agreed covenant changes with creditors in January.
Aluminum prices now stand at around US$2,240 per tonne, some 25 percent lower than a high in May 2011. Lower aluminum prices have forced other major producers such as Alcoa to cut capacity.
RUSAL's stock, at HK$6.12, is now 43 percent below its IPO price of HK$10.80.
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 website of Renova Group, his investment holding group and a strategic investor in RUSAL.
Due to report its latest earnings report on March 19, RUSAL posted a net profit of $432 million for the three months ending September, beating an average forecast of $409 million from 10 analysts polled by Reuters, on lower costs.
RUSAL completed its US$9.33 billion debt refinancing in September 2011 with Russian and international banks. It said that at the end of September its net debt stood at US$10.91 billion.
(Additional reporting by Alison Leung and Polina Devitt,; Editing by Timothy Heritage and Elizabeth Piper)
Source: http://news.yahoo.com/aluminum-giant-uc-rusal-board-turmoil-chairman-quits-024528070.html
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