Mechel Jumps Most in 7 Months on Elga Coalfield Sale Reportsby
Company may sell Elga to Gazprombank to cover debt: Vedomosti
Mechel shares rise 19% at open to highest since September
Shares of Mechel OJSC, Russia’s largest coal producer, jumped the most in seven months on a report that the company may sell a deposit in the nation’s Far East to pay debts owed to the country’s biggest lender.
Mechel rose as much as 19 percent to 71.28 rubles per share before trading 15 percent stronger at 68.81 rubles as of 10:44 a.m. in Moscow. The shares were the biggest gainers on the 50-stock Micex Index, which fell 0.4 percent.
Mechel may sell its biggest coalfield under development, the Elga deposit in Russia’s Yakutia region, to Gazprombank JSC, one of its biggest creditors, the Vedomosti newspaper reported. The miner may then use the funds raised to pay off the debt and interest it owes to Sberbank PJSC, Russia’s largest lender, the paper said, citing two people familiar with the matter.
Sberbank, which is owed about $1.3 billion by Mechel, is the only major lender yet to agree on the mining company’s debt restructuring. In July, the lender said it planned to file bankruptcy claims against three Mechel units, including a steel smelter in Chelyabinsk and coal company Yakutugol OJSC. Mechel has been trying to alter the terms of its debt since 2014, after coking-coal prices dropped.
Mechel has received offers to sell the Elga deposit, the company’s owner, Igor Zyuzin, said on state TV Thursday. Mechel’s press service declined to comment on Friday. The press departments of Gazprombank and Sberbank didn’t immediately respond to requests for comment on the Vedomosti report.