Mechel Refinances Short-Term Credit Facilities
07/14/2009 - Mechel OAO signs agreements to refinance short-term credit facilities totaling $2.6 billion US dollars the company had raised to purchase assets in Yakutia and Oriel Resources Ltd. (Great Britain).
Mechel OAO announced that it has signed agreements to refinance its short-term credit facilities totaling 2.6 billion US dollars the company raised to purchase assets in Yakutia and Oriel Resources Ltd. (Great Britain).
The credit facilities that were renegotiated included those provided for the October 2007 acquisition of Yakutugol Holding Company OAO and Elgaugol OAO and the April 2008 acquisition of Oriel Resources Ltd. (Great Britain).
For the Yakutia coal assets acquisition, Mechel refinanced $1.6 billion USD at LIBOR rate +6% of the total $2 billion USD facility. The maturity period provides for equal monthly installments from September 2009 to December 2012. The remainder of the credit facility of $400 million USD was repaid earlier with the company’s own funds, in accordance with the agreed schedule.
For the $1.5-billion USD Oriel Resources Ltd. acquisition, Mechel refinanced the amount of $1 billion USD at LIBOR rate +7%. The maturity period provides for equal monthly installments from July 2010 to December 2012. The remainder of the credit facility of $500 million USD was repaid from funds raised from Gazprombank three-year loan, according to the agreement the company signed in February 2009.
“Mechel has become the first Russian company which managed to refinance its significant credit facilities with foreign banks by means of long-term instruments and, moreover, it was done on acceptable and favorable terms in current market environment,” commented Mechel OAO CFO Stanislav Ploschenko. “Financial covenants were also adapted to the company’s current situation.
“I would like to emphasize that as a result of these credits refinancing the short-term debt of the company of $2.6 billion US dollars will be again reclassified as long-term debt in corporate financial reporting, making performance of financial and operational activities much easier,” added Ploschenko. “Moreover the refinancing structure has been modeled assuming that even if current level pricing for Mechel’s products, that are not the highest ones, remains, the company will face no difficulties to meet its financial obligations.
“I consider this refinancing as an important sign that confirms Russian borrowers’ ability to carry on successful and constructive dialogue with international financial organizations in the current difficult situation,” concluded Ploschenko.
“I consider this refinancing as an important sign that confirms Russian borrowers’ ability to carry on successful and constructive dialogue with international financial organizations in the current difficult situation,” concluded Ploschenko.
Mechel, one of Russia’s leading companies, unites producers of coal, iron ore concentrate, steel, rolled products, ferroalloys, nickel, hardware, heat, and electric power. Its business includes four segments—mining, steel, ferroalloys and power—and its products are marketed domestically and internationally.
