Russia’s Mechel debt burden woes need to be resolved-lobby group

MOSCOW, Mar 10 (PRIME) -- The debt problem of metals and mining group Mechel must be resolved despite some improvement in its situation, Alexander Shokhin, president of the Russian Union of Industrialists and Entrepreneurs, told reporters Tuesday.

On March 3, Industry and Trade Minister Denis Manturov said Mechel is ready to repay all interest on loans to banks as its financial position is improving.

“There is clear positive dynamics. Mechel’s problem is that it bought many assets for rather high prices. Of course, no one expected a crisis, but nevertheless Mechel is overloaded with assets bought at a maximal price, and that is why they face such a problem,” Shokhin said.

“The ministry was right that they are gradually recovering and are ready to service debts, which is already a sign of improvement. Nevertheless, there are creditors and there is a borrower with these bad debts, and the issue must be solved somehow.”

Mechel has been in debt restructuring talks with its core creditors – Sberbank, Gazprombank and VTB Bank, for several months. On February 24 Mechel announced that it plans to ask the government for help under an anti-crisis plan, while on February 7 VTB notified other creditors that it is going to file a bankruptcy suit against the company.

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