Mechel Raises Pre-Export Finance Facility
09/16/2010 - Mechel OAO raised the US$2 billion pre-export facility to refinance Mechel Group’s remaining debt obligations under the two syndicated pre-export facilities (the original US$2 billion and the US$1 billion facilities raised for acquisition of OJSC Yakutugol and Oriel Resources Ltd., respectively).
Mechel OAO raised the US$2 billion pre-export facility to refinance Mechel Group’s remaining debt obligations under the two syndicated pre-export facilities (the original US$2 billion and the US$1 billion facilities raised for acquisition of OJSC Yakutugol and Oriel Resources Ltd., respectively). Those facilities were already in the repayment phase with final maturity in December 2012.
The new facility is split between the borrowers in mining (OJSHC Yakutugol and Southern Kuzbass Coal Co. for US$857.1 million each), steel (OAO Chelyabinsk metallurgical plant for US$95.3 millon), and ferroalloy (OAO South Urals Nickel Plant for US$190.5 million) divisions of Mechel Group. It is drawn in two tranches—a 3-year and a 5-year one. Repayment will be done by monthly installments after 9 and 15 months grace periods, respectively. The facility is structured as a secured dual tranche pre-export facility.
The company appointed ING Bank N.V. and The Royal Bank of Scotland N.V. as coordinators.
BNP Paribas SA, Closed Joint Stock Co. UniCredit Bank, Commerzbank Aktiengesellschaft, HSBC Bank plc, Natixis, OJSC “Nordea Bank”, Raiffeisen Zentralbank Oesterreich AG, Société Générale, UniCredit Bank AG (formerly known as Bayerische Hypo- und Vereinsbank AG), VTB Bank (Austria) AG, VTB Bank (Deutschland) AG and VTB Bank (France) SA acted as Mandated Lead Arrangers, and Morgan Stanley and Credit Suisse as Lenders for the facility.
“Mechel has become the first Russian metals and mining company which arranged a new five-year tenor PXF transaction after the financial crisis,” said Stanislav Ploshchenko, Mechel’s Chief Financial Officer. “It is also remarkable that this transaction came only a year after the restructuring of Mechel’s international debt on less attractive terms. This time we also have fewer banks in the pool, many of them significantly increased their exposure since the previous facilities, but we also have completely new banks, which suggests a significant revaluation of our credit risk profile in the financial community.
“The new financing is more favorable to our Group not only in tenor but also in pricing and collateral security,” Ploshchenko continued. “Besides, the new feature of this transaction is that it is structured without cross security and cross guarantees between our Group’s divisions and therefore marks a significant step forward in our strategy to separate the divisions not only from the operational management’s prospective but also in financing their operations including future debt and equity raising.”
Mechel is one of the leading Russian mining and metals companies. Its business includes four segments: mining, steel, ferroalloy and power. The company unites producers of coal, iron ore concentrate, nickel, steel, ferrochrome, ferrosilicon, rolled products, hardware, heat and electric power. Its products are marketed domestically and internationally.
