Russia’s Mechel reaches restructuring deals with largest creditors

MOSCOW, Feb 5 (PRIME) -- Russian debt-ridden metals and mining company Mechel has reached debt restructuring deals with all largest creditors, Igor Zyuzin, chairman of the board of directors, told the company’s shareholders late Thursday.

“We have reached agreements on restructuring terms with our largest creditors. Under these agreements, the start of debt redemption is postponed to 2017, and on the majority of debts the start of redemption may be postponed until 2020 if the shareholders approve deals with bank-creditors,” he said.

In accordance with the reached agreements, the banks will reduce interest rates and write off fines, while a part of interest payments will be capitalized. These measures will allow the company to restore its financial solvency, Zyuzin said.

The total volume of debt that will be restructured will amount to U.S. $5.132 billion and it includes only the company’s major creditors, Mechel said.

The sum of the restructured debt will thus amount to 80% of the company’s total debt. Mechel’s debt to Sberbank amounts to $1.267 billion, while debt to Gazprombank amounts to $1.793 billion, debt to VTB Bank stands at $1.068 billion, and debt to a syndicate of international banks is $1.004 billion.

Mechel said earlier that it had reached debt restructuring agreements with VTB Bank and Gazprombank, while talks with Sberbank were so far continuing.

Mechel said its entire debt to VTB Bank and Gazprombank will be converted into rubles. The interest rates will be tied to Libor and the central bank’s key rate.

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