Sept. 26 (Bloomberg) -- OAO Mechel dropped, leading the declines on Russia’s benchmark stock gauge, on concern the largest producer of steelmaking coal may not be able to sell its assets and reduce debt quickly.
Mechel plunged 5.4 percent to 216 rubles by the close in Moscow, its biggest drop since June 22. The Micex Index lost 2.5 percent.
The board recommended considering the sale of a stake in OAO Mechel-Mining to help fund the Elga project, the company’s biggest coal development, Mechel said yesterday in a statement. Mechel will also try to divest other assets in eastern Europe, Russia and Kazakhstan.
The sales “will not be an easy task under current market conditions and could take several years,” Troika Dialog’s analyst Mikhail Stiskin said in an e-mailed report.
Mechel is seeking funds to reduce borrowings, which totaled $9.6 billion at the end of the first quarter, making it one of Russia’s most indebted miners. The Moscow-based company approved a sale strategy in May, without identifying assets.
Mechel, controlled by billionaire Igor Zyuzin, has had preliminary contact with Asian companies, testing their interest in buying a minority stake in OAO Mechel-Mining or its division running the Elga coal project, three people with knowledge of the matter said on Sept. 14, asking not to be identified because the plans are private. Should Mechel find a partner to buy into the unit, it would sell no more than 25 percent, the people said.
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