Russia’s Mechel fulfills all conditions for sale of 49% in Elga

MOSCOW, Jun 9 (PRIME) -- Russian metals and mining group Mechel has fulfilled all suspensive conditions under a deal to sell 49% in the Elga coal mine in the republic of Yakutia to Gazprombank, and the deal will be closed later in June, Gazprombank said in a statement Thursday.

Debt-ridden Mechel and Gazprombank concluded an option agreement to sell the stake in Elga, whose reserves amount to more than 2 billion tonnes, in April.

“The deal will allow Gazprombank to cut the credit risk on Mechel and to receive additional income though a future sale of the stake in the field, while it will also allow Mechel to decrease the debt burden and to remain a controlling shareholder in the project,” the bank said.

The major part of income from the deal will be allocated for redemption of bridge loans raised by Mechel from Gazprombank in April in order to fulfill liabilities to Sberbank. “Thus, the process of restructuring Mechel’s debt to largest creditor banks – Gazprombank, Sberbank and VTB – launched in 2014…has been finished,” the bank added.

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