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Rusal warns sanctions 'materially adverse' to company; CEO, seven directors to resign

Rusal warns sanctions 'materially adverse' to company; CEO, seven directors to resign

A Russian aluminum giant just lost its CEO and most of its board as it tries to wriggle out of USA sanctions. "The US Treasury may accept those efforts".

The statement came a day after the Russian aluminium giant said its chief executive and seven board members had quit, and warned it may have problems servicing its debt due to the impact of US sanctions.

Mr Deripaska, who is himself the subject of USA sanctions, had already announced his intention not to stand for re-election to the board.

The sanctions hit oligarchs close to President Vladimir Putin, including Deripaska.

Manufacturers feared they would no longer be able to purchase supplies from the firm, potentially snarling production in many sectors of the USA economy and elsewhere.

Faced with the market turmoil, the United States government then indicated Rusal could avoid being caught up in the sanctions by cutting ties with Deripaska, one of the so-called Specially Designated Nationals targeted by the sanctions.

Deripaska has already said he agreed in principal to reduce his influence in another company which controls Rusal.

The resignations announced Thursday are an extra step to comply with Washington.

The sanctions, announced on April 6, were a response from the US to Russia's "malign activity" around the globe, said US Treasury Secretary Steven Mnuchin.

Rusal itself also noted that the sanctions may still harm its operations.

Whilst further evaluation is being carried out by the Company to assess the impact of the OFAC Sanctions on the Group, the Company reiterates that its current assessment is that it is still highly likely that the impact may be materially adverse to the business and prospects of the Group.

The bank is under the control of the Russian central bank and has been earmarked by the Kremlin to provide finance to sanctioned Russian firms, a task most regular banks will not undertake because of the sanctions risk.

In an illustration of the damage dealt by the sanctions, Russia's VTB bank (VTBR.MM) said it had become owner of a 9.6 percent stake in En+ after the firm's stocks sank.

In a separate statement issued overnight, Rusal said that unless sanctions are lifted or the USA comes to another decision, global banks are likely to stop dealing with the group - and operations, including metal production and sales, would be hit.

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