Russia’s VTB in talks with banks on Mechel debt restructuring

HANOI/KHABAROVSK, Apr 6 (PRIME) -- Russia’s VTB Bank is holding talks with banks to restructure debts of debt-ridden metals and mining group Mechel, but there are no results yet, VTB Bank’s CEO Andrei Kostin told reporters Monday.

“We are working with Mechel, consultations continue now, we are holding talks with other banks as well, including Gazprombank, trying to find a decision, but I can’t say yet that we have a deal,” Kostin said.

“One of the key points on Mechel is the repayment of overdue debt, I call this a positive decision for the debt settlement, in the context of solving the problem – to repay the debt and not allow it to appear anymore.”

If an agreement is reached, it will encompass a delay of the main debt repayment. “But the repayment of overdue debt and the necessity to pay interest on time – this is certainly a condition that is the basis of all agreements,” Kostin said.

According to Mechel, the company’s debt to its main creditors – Sberbank, VTB Bank and Gazprombank – amounts to U.S. $1.3 billion, $1.8 billion and $2.3 billion, respectively. Mechel has been in fruitless debt restructuring talks for about a year.

In March, VTB notified other Mechel’s creditors that it will file a bankruptcy suit against the company, but later said it received a reasonable debt restructuring proposal from the company and saw possibilities of a further dialogue.

Creditors are inclined to have Mechel bailed out, and a decision to include the company on the list of firms eligible for government support should be made after the bailout, Deputy Prime Minister Yury Trutnev, the presidential envoy to the Far East, said on April 4.

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