Mechel Agrees With Sberbank on $1.3 Billion Debt Restructuring

  • Mechel is obliged to pay back 2.8 billion rubles to lender
  • Gazprombank buys some Mechel debt from Russia's biggest bank

Mechel PJSC, Russian coking coal and steel producer, agreed with Sberbank PJSC on a $1.3 billion debt deal after almost two years of talks.

The state-controlled lender agreed to restructure two ruble loans to Mechel’s units, totaling 30 billion rubles ($449 million), and another for $427 million, and will repay 2.8 billion rubles to a unit of Sberbank Leasing, the miner said in the statement. As part of the accord, a unit of Gazprombank JSC has become the legal successor to a further $423 million and 3.1 billion rubles that Mechel owed Sberbank.

Mechel has been trying to alter its borrowing terms since 2014, following a slump in coal prices. Sberbank was the only major lender to hold out after Gazprombank and VTB Bank agreed to a restructuring last year.

Mechel shares advanced 0.7 percent to 64.93 rubles at 4:45 p.m. in Moscow after the company announced that the parties reached agreement.

Under the agreement with Sberbank, Mechel will have a grace period until April 2017 with loans maturing in April 2020 to be paid in monthly installments. As much as 40 percent of the interest payments may be postponed. The grace period on the main debt may be extended until January 2020 with a due date of April 2022 if VTB Bank agrees to similar conditions and if other conditions are met in 2016, the company said.

Mechel’s shareholders will vote on debt measures on May 26 after the company failed to get enough votes from minority investors in March to approve a $5 billion restructuring plan.

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