Russia’s VTB wants to get stake in Mechel write-off debt by June

DAVOS, Jan 22 (PRIME) -- Russia’s second biggest lender VTB wants to get a stake in metals and mining giant Mechel in exchange for a debt write-off until June, CFO Herbert Moos told PRIME late Wednesday on the sidelines of the World Economic Forum.

“I think that we will find a compromise. It will be a thorny path, unfortunately. I think that we will have to (arrange a solution) until summer,” he said.

“If we bear all the risks, I mean if we understand that the owner cannot support the company financially now, or if he must add new equity now, his own equity, or if he is unable to bear the risks, if the risks remain with banks, then the banks must have stakes.”

He said that the size of the stake will depend on prices for metals and on Mechel’s debt burden, but the stakes of current shareholders will be diluted significantly.

VTB is preparing lawsuits against Mechel over 63 billion rubles of debts of its foreign trade affiliates. This step will force Mechel to agree with VTB’s terms of debt repayment faster because bankruptcy of the traders may paralyze Mechel’s sales.

Mechel has been in debt restructuring talks with its main creditors – Sberbank, Gazprombank and VTB Bank, which account for about U.S. $4.5 billion of the total debt – for about six months in 2014. Gazprombank approved the restructuring schedule proposed by the company but VTB and Sberbank officials called Mechel’s offers “far from groundbreaking”.

(65.5558 rubles – U.S. $1)

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