OAO Mechel fell to the lowest level on record amid speculation that an investor facing a margin call may have sold shares as Russia’s largest coking coal producer holds talks with banks about restructuring debt.
The shares slumped 41 percent to 57 rubles by the close in Moscow today, their biggest decline since at least 2008. American depositary receipts sank 21 percent to $2.27 by 1:57 p.m. in New York, after falling as much as 43 percent earlier to the lowest price on record.
“There might be a margin call on some minority investor’s stake or some foreign fund is willing to sell off,” said Boris Krasnojenov, a Renaissance Capital analyst in Moscow.
The decline may be fueled by speculation about difficulties with debt talks, which the company denies, Krasnojenov said by phone. Mechel is one of Russia’s most-indebted mining companies, with net debt of $9.55 billion as of June 1. It has delayed publication of its first-half financial report, avoiding a possible technical default.
“We don’t see any fundamental reasons for such declines,” OAO Gazprombank First Vice President Ekaterina Trofimova said by phone. The Russian lender, one of Mechel’s largest creditors, is part of the group involved in covenant talks. “Discussions are on schedule and on a positive course,” and the group plans to complete them by the end of the month, Trofimova said.
Financial Markets Service, Russia’s market regulator, is looking into Mechel’s stock trading after 5 p.m. on the Moscow Exchange, Svetlana Shvetsova, spokeswoman for the service, said by e-mail today.
The decline in the Russian shares accelerated after 5 p.m. The Moscow Exchange halts trading of stocks that rise or fall more than 20 percent only before 5 p.m., Nikita Bekasov, a spokesman for the bourse, said by phone.
The debt talks are going well, Arseniy Palagin, a Mechel spokesman, said by phone, reiterating comments made by Chief Financial Officer Stanislav Ploschenko on Nov. 11. The slump looks “purely speculative,” Palagin said.
Billionaire Igor Zyuzin, who controls the coal and steel producer, has pledged a 44.6 percent stake for loans, the company said in March. “It may be suggested that there’s a margin call on the main owner’s stake,” George Buzhenitsa, a Deutsche Bank analyst in Moscow, said by phone.
Palagin declined to comment on Zyuzin’s stake, saying it’s not a question for the company. A margin call is a demand by a broker or a clearinghouse that an investor deposit additional cash or securities to cover a loss.