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Mechel approaching restructuring agreements with Gazprombank and VTB
By Kali Hays
New York, April 28 – Mechel OAO chief executive officer Oleg Korzhov said during a Monday conference call that the company has agreed to “general indicative conditions” and is “very close” to signing term sheets with Gazprombank for a restructuring of Mechel’s debt.
Since Mechel turned to its creditors at the end of 2014 to embark on a possible restructuring or refinancing of its debt, Korzhov said that the company has been in “fairly vigorous negotiations with all lenders,” in particular Gazprombank and VTB Bank.
“With VTB and its working groups, we have agreed on general terms of restructuring and also the schedule of the redemption of collateral,” Korzhov said.
“Parallel to that, we are conducting negotiations with a syndicate of five foreign banks and a restructuring of company debt is being pursued quite vigorously.”
Though the company is pursuing a restructuring, Mechel chief financial officer Andrey Silvchenko said that the company saw a 22% decrease in its net bank debt between the beginning of 2014 and the end of the year, which he attributed mainly to the devaluation of the ruble.
According to Silvchenko, the devaluation of the ruble also “significantly deteriorated” Mechel’s balance sheets and the company was forced to reclassify most of its debt to short-term after it defaulted on credit agreements at the end of last year.
However, Silvchenko said that “the company continues as a going concern, and given certain improvements with operations of the company, we hope to reach agreements with all of our lenders on the restructuring of our debt portfolio.”
Mechel is a Moscow-based mining, metals and power company.
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