Gazprombank discusses purchase of Mechel debt

Gazprombank is in talks with Sberbank, Russia's largest creditor, over the acquisition of debt from the mining and metallurgical company Mechel. Sources familiar with the situation report that Mechel, controlled by businessman Igor Zyuzin, acquired most of its debt before the economic downturn began. Mechel and the banks declined to comment on the price at which Sberbank will issue the debt.

The company, which unites the production of iron ore, coal, steel, ferroalloys, rolled products, electricity and heat, employs 72,000 people. Since 2014, Mechel has actively participated in negotiations with its main creditors, including Sberbank, VTB and Gazprombank, on debt restructuring. The debt of Mechel at the end of January amounted to $ 6.3 billion, including to Gazprombank $ 1.4 billion and 26.8 billion rubles, to Sberbank 61.8 billion rubles, VTB 61 billion rubles. In addition, the company owes $ 1 billion on pre-export credits to a syndicate of banks.

Earlier, the head of Sberbank said that the bank would file a lawsuit against Mechel for bankruptcy in court if no acceptable options for restructuring were found before the maturity of payments came. During a conference call this week, Oleg Korzhov, CEO of Mechel, said the company is in talks with all of its creditors on debt restructuring. He told investors that general conditions and a schedule for debt restructuring had been agreed with Gazprombank.

Mechel invested heavily in expansion before the demand for steel products and raw materials began to fall during the 2008 financial crisis, and then was forced to sell some of its assets when they became unprofitable. Now Mechel's net debt is about $ 7 billion. In solving financial issues, the company was partially helped by the devaluation of the ruble.