Moscow. December 24. The history of relations between “Mechel” with the creditors is very cinematic. It has charismatic “suspect”, there is “an evil investigator”, “good investigator”, “neutral investigator”, there is the intervention of higher powers. Only no happy ending, and this ensures that fans of the series new season.
Since the beginning of 2014 the company Igor Zyuzin sitting at the table of negotiations with VTB, Sberbank and Gazprombank. In the past year, the patience of creditors, it would seem, was about to burst: VTB and Sberbank threatened to bankrupt “Mechel”, and only Gazprombank believe Zyuzin and became his supporter. In the end, VTB, having thought, has agreed on debt restructuring, GPB had subscribed to it for a long time, and only the savings Bank still stands the role of “bad COP”. However, when you spent so much time and effort, compromise, apparently, inevitable: the moment when you could be honest with itself and to go all the way, clearly missed.
In favor of “Mechel” was played by the perception of its owner officials: as many banks could blame Zyuzin in nedogovorosposobnostyu, but state it in the story of “doctor” proved the readiness to listen to criticism. Yes, the owner of “Mechel” clearly underestimated the risks of his aggressive development model and now refuses to pay for it, parting with the control of the company in favor of creditors, but he is not buying jets, houses and foreign football clubs. Finally, the rapid deterioration of a conjuncture of commodity markets who nearly destroyed Mechel, played into the hands of its owner: if the asset in the current environment was really welcome for the major players, hardly anything could prevent a change of ownership.
As a result, even the most implacable creditor of Mechel Sberbank has ceased to threaten the company with bankruptcy, went to settlements for several lawsuits, and reduced the incidence of denials that followed the reports of the management of “Mechel” of the imminent restructuring of the debt to the Bank. This allowed the session to announce an extraordinary shareholders ‘ meeting (4 March) for approval of transactions with all three state-owned banks. Although the savings Bank on the same day emphasized that the agreement is not yet achieved.
Briefly about the first part
In 2014, Mechel was working on various solutions to the debt settlement of $9 billion (as of end of 2013), and even some of them were in the spirit of fantasy.
For example, in the summer of 2014 in mass media there was a version of debt restructuring and business group, which featured Evraz. Ostensibly dealt with the creation on the basis of certain assets of two groups of far Eastern mining and metallurgical company with a multi-stage structure financing and ownership, with the participation of Vnesheconombank, the shareholders of port Vanino (the beneficiary of which is considered Zyuzin) and certain third-party investors.
More realistic, but still not shielded the scenario to save the company, was calculated at issue in favor of VEB convertible bonds, redemption of which would have funded three banks. Also broke down and the scheme of sale of “Mechel” Russian Railways railway link to the Elga Deposit.
In the end, every possible scenario was a failure (= non-cash), and the relationship of creditors of the company escalated. Banks insisted on the conversion of debt into shares and the removal of leadership from management, while Zyuzin to play a supporting role not wanted and the only possible way of salvation believed the restructuring and refinancing of debts with deferred interest payments.
VTB and Sberbank have begun to address in court about collecting with the group’s debt, while Gazprombank, on the contrary, he distinguished himself by moderation and pliancy.
Part two: episode one
The second part of the movie “Mechel” from the beginning of 2015 is immediately updated with new scenes from the halls of the courts. Some subsidiaries of the group partially repaid more than 1 billion rubles of interest on VTB loan of 16 billion rubles, while only Mechel owes the Bank 70 billion rubles and more than $170 million ($1.15 billion at the end of 2014). That VTB stressed that the company Zyuzin still is servicing the debt on time and in full, and payments though are but late.
A few days later last year’s fear of “Mechel” became a reality – VTB filed a lawsuit against the company more than $ 50,1 billion. But the Bank did not stop and already in the beginning of March, first orally and then in writing notify all creditors of “Mechel” about intention to address in court with the statement for bankruptcy. When the Bank complained that since June 2014, “Mechel” has not made any constructive proposals on the resumption service credit. It was expected that a month later, by mid-April, if the parties do not resolve the dispute, then the dialogue will continue in court.
Moreover, the government in March once again returned to the idea of creation of Bank of bad debts, which with varying degrees of intensity is discussed from the beginning of the crisis of 2008-2009. The point of such a Bank that can be used to support any of the backbone enterprises, was spelled out in the anti-crisis plan of the government prepared in late 2014. According to some media, the resumption of the discussion was an attempt to solve the debt problems of large companies, first and foremost, “Mechel”, and the initiator was indifferent to the company Gazprombank.
It should be noted that in a difficult dialogue with the banks consultant of “Mechel” was made by Rothschild, who sent the Bank’s proposal to convert part of the debt into shares of the company. The head of Sberbank German Gref said that such a proposal does not suit the Bank, which claims at least a controlling stake, and “Mechel” did not begin to specify the size of the stake.
Episode spring/summer 2015
A month has passed from the date of notification VTB other creditors of intention to apply to the court for the bankruptcy of “Mechel”, but the application never happened. However, to finish off the company Zyuzin, may not have been necessary, the court satisfied the claim of the Bank for 50 billion rubles, despite the assurances of the representatives of the debtor at the meeting about “continuing the negotiations in constructive way.” How honest were the persons of “Mechel” in court, showed the time.
In June, the head of VTB Andrey Kostin said that the Bank is ready to restructure the debt of “Mechel” in exchange for repayment of overdue interest and additional liens. Then Kostin said that the parties have “in principle agreed with “a Mechel” options agreement”: the repayment of principal deferred from 2015-2016 to 2018-2019.
But the company Zyuzin had until the end of June to repay the overdue interest in the amount of 4.5 billion roubles and to give additional bonds and sureties of operating companies agreed with VTB volume. On the same day, Mechel said that out of 4.5 billion rubles. the company left to pay off 2.8 billion roubles.
In time “Mechel” has met the obligations to VTB, and the signing of final documents expected within a month. At the same time the CEO of the company-debtor Oleg Korzhov has announced the expected dates for the agreements with Sberbank – the end of summer. The same opinion was held and the first Deputy Chairman of Sberbank Maxim Poletayev.
While VTB and Sberbank publicly decided the fate of Mechel, Gazprombank from time to time avoided to talk about their plans for the company Zyuzin. But soon the head of the Bank Andrey Akimov said that Gazprombank is considering the purchase of debt “Mechel” before the savings Bank. Before Poletaev no secret that Sberbank has two potential buyers for the company’s debt. However, Gref later shattered the dreams and hopes, saying that “real buyers” no.
Surprise for “moviegoers” was the news that the owner of AFK “Sistema” Vladimir Yevtushenkov was negotiating the purchase of “Mechel”. But, according to him, this (possible) deal was considered along with many other assets that fell into the “pipeline” of the holding, but now interest in the company no.
Despite the fact that wanting to buy the entire debt of “Mechel” before the savings Bank ($1.36 billion), it became known that Gref is ready to make some concessions to re-structure of 30% debt, provided that there is a buyer for the remaining 70% (no discount or installment). However, such altruists was not found.
In parallel, the patience of the savings Bank came to an end, and in early July the Bank informed about the intention to initiate bankruptcy three “daughters” “a Mechel” – “Yakutugol”, Bratsk Ferroalloy plant and Chelyabinsk metallurgical plant.
Last day of summer for “Mechel” was, perhaps, the happiest day of this season – the company announced agreements with the first largest creditor. They became, as is not difficult to guess, Gazprombank. The parties signed an agreement on the restructuring of debt totaling $1.4 billion and 33.7 billion rubles ($2 billion). The credit agreements provide for a deferral of the repayment of the principal until April 2017, with subsequent monthly payments until April 2020 the Interest in excess of 8.75% per annum, capitalized.
The episode “Autumn marathon”
With the arrival of autumn, the assurances of top-managers “a Mechel” and banks of the imminent restructuring began to fade, and the reason for that was not seasonal changes. It seemed that the company at least until the end of the year will be traditionally to convince the audience in “constructive negotiations with creditors” and to promise to agree with them “soon”.
But VTB has corrected the situation. The first statement of the head of VTB Kostin about the imminent signing of the agreement was made on September 4 on the sidelines of the economic forum in Vladivostok, where they Zyuzin looked more like a confidant, and not heads of organizations are constantly faced in the courts. After five days of “Mechel” solemnly announced the postponement of repayment of a debt to VTB – from April 2017 to April 2020.
Despite this, the court claims the Bank is in no hurry to cancel. Then the representative of “Mechel” declared that the agreement with VTB imply the cessation of litigation in the courts. But, as it turned out at the next hearing, and this procedure requires time for the beginning of “Mechel” it is necessary to fulfill the conditions precedent. On the fulfillment of a debtor reported on 13 October, and from that day the restructuring agreement entered into force.
Also in the fall of Mechel restructured two series of bonds, but this event was preceded by techdepot totaling nearly 5.2 billion rubles due to the lack of funds from the company. The holders of the bonds approved the offer, according to which the first 10% (500 thousand securities of each series) was planned to redeem on September 28, 2015, 5% (250 thousand papers) are waiting for the redemption on March 1, 2016 and another 5% (250 thousand) – 30 August 2016.
The announcement of the next part
That in the top news of the metals industry 2016 will be among the leaders of “Mechel”, no doubt.
For example, to recover from “Mechel” more than 50 billion rubles will be considered on January 21 next year. According to the representative of VTB, the parties, although he had signed the supplemental agreement under the credit agreement, however, for new commitments on the part of “Mechel” continues the non-performance.
Moreover, as it became known, VTB and Gazprombank, in addition to agreeing on a new plan for repayment of debt “Mechel”, continue to examine the options for rescue groups. According to Kostin, “Mechel” ready to sell “Elgaugol” for the partial repayment of the debt, and the buyer will be Gazprombank. VTB, in turn, is considering the deal, and the “Mechel” funds may be used to repay Sberbank debt. However, the confident tone of the head of VTB was later adjusted in view of the uncertainty about the fate of credit lines VEB for Elga, which was approved in the fall of 2013 in the amount of $2.5 billion for 13.5 years. If the credit of the Bank is not involved, the decision of the VTB to join Elga will be a “probably negative”.
Also resumed conversations around the railroad to ELGI. And the management of “Mechel”, and the head of Russian Railways Oleg Belozerov claim that discussing options for the development of this branch.
At the time of the release were not reported on the signing of debt restructuring “Mechel” before the savings Bank. Only the top management of “Mechel” reiterated that the parties reached the finishing line, and signing of documents will take place in the near future. However, the tone of the dialogue of the savings Bank with “a Mechel” has softened, at least in court. The debtor company signed settlement agreements with four of the claim of Sberbank for a total amount of RUB 3.3 billion and $721 million.