UPDATE: Russia’s Mechel in fruitful talks to restructure huge debt

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MOSCOW, Dec 16 (PRIME) -- Russian metals and mining giant Mechel holds fruitful talks with creditors to restructure its debt, the company said in a statement Wednesday.

“We continue constructive negotiations with lenders on debt restructuring and see positive dynamics,” the company said.

Mechel’s net debt decreased 7% in July–September to U.S. $6.454 billion as of September 30.

The company also negotiates with possible partners on development of the Elga coal field. The field’s reserves stand at over 2.1 billion tonnes of coal and it is developed by Mechel’s subsidiary Yakutugol. Mechel discussed the sale of a stake in the project as part of its debt settlement talks, but a search for investors was complicated by a poor market.

Mechel’s debt contracted to U.S. $6.178 billion as of December 10 from $6.313 billion as of September 1, as seen by PRIME in the company’s materials. The share of U.S. dollars in the debt amounts to 58%, of euros to 6% and of rubles to 36%. The debt to local banks accounts for about 68%, to foreign banks for 24% and other debt instruments account for the remaining 7%.

According to the company, its net debt/EBITDA ratio amounted to 8 as of late September, with the bulk of the debt being a short-term one as the company is still in debt restructuring talks with its creditors. Mechel’s capital expenditures contracted about 74% on the year to $115 million in January–September.

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