Mechel deal grants syndicated facility covenant holidays through 2014

By Caroline Salls

Pittsburgh, Nov. 25 - Mechel OAO reached a covenant holidays agreement on its $1 billion syndicated facility, with the holidays set to run until the end of 2014, according to a company news release.

Mechel said the agreement was signed on behalf of a syndicate of international banks, including ING Bank NV, Societe Generale, UniCredit, Commerzbank Aktiengesellschaft, Raiffeissen Bank International AG, VTB, Caterpillar Financial Services Corp. and ICBC (London) plc.

"Obtaining covenant holidays from the pool of international lenders in such difficult market circumstances and in a short period of time is a major milestone in our debt refinancing process and a clear acknowledgement by leading financial institutions of our successful efforts aimed at asset restructuring," Mechel chief financial officer Stanislav Ploschenko said in the release.

"We are witnessing significant progress in negotiations with our international creditors on the finalization of our debt optimization discussions, and we hope to also reach agreements with other lenders in the upcoming weeks for the finalization of the financial covenant holidays."

The borrowers under the agreement are Mechel's chief mining division enterprises Yakutugol Holding Co. OAO and Southern Kuzbass Coal Co. OAO.

The process was coordinated by ING Bank, Societe Generale and VTB Capital.

Mechel is a Moscow-based mining and metals company.

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