Russian govt mulls saving Mechel, bankruptcy is unwanted

MOSCOW, Jul 11 (PRIME) -- The Russian government is considering various options of saving debt laden metals and mining group Mechel other than direct budgetary support, and bankruptcy is an undesired option, Industry and Trade Minister Denis Manturov told PRIME in an interview on Friday.

“The company has to recover financially, but to provide it we must first understand the debt structure and make a decision after that,” Manturov said, adding that direct budget support was considered, “but when we balanced the budget, we did not see any reserves for this.”

“We have to find strategic partners who will be ready to enter the company, its projects, and provide the finishing of the started project’s implementation.”

The government is holding talks with foreign investors on entering Mechel, whose net debt stands at U.S. U.S.$ 8.3 billion. “Currently no one is willing to participate in the project. The main question is if anyone participates in the project he will be held accountable in the future, that is why we have no brave people today,” Manturov said.

“Most likely that (the partners) will be companies from eastern Asia, maybe from China, specifically for some projects, for the Elga field in particular.”

He also added that the government is not interested in splitting Mechel. “Today Mechel is already selling its unprofitable and non-core assets.” “Selling the core assets which make profit I consider as unreasonable. The entirety and the logistic structure must remain intact. It is the ministry’s position.”

On Thursday, Manturov said that Mechel must improve administrative control to recover financially.

On Wednesday, state-owned Vnesheconombank CEO Vladimir Dmitriyev said that the bank is not interested in bailing out Mechel.

In June, Kommersant said that Gazprombank, VTB and Sberbank will provide Mechel with a 215 billion ruble loan to help it repay its U.S. $8.3 billion debt, but later VTB said it will not give Mechel any new money.

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