The total amount of the restructured debt of “Mechel” will be $5.1 billion

The total amount of the restructured debt of “Mechel” will be $5.1 billion


According to the materials, the debt to Sberbank is 1,267 billion dollars, before Gazprombank – 1,793 billion, VTB – 1,068 billion. The debt owed to the syndicate of international banks is 1,004 billion.

MOSCOW, 4 Feb. The total amount of the restructured debt of “Mechel” will make 5,132 billion dollars and includes only the major creditors, according to the presentation of the company.

Thus, the amount of the restructured debt will be 80% of the total debt of “Mechel”. According to the materials, the debt to Sberbank is 1,267 billion dollars, before Gazprombank — 1,793 billion, VTB — 1,068 billion. The debt owed to the syndicate of international banks is 1,004 billion. All the figures on debt are shown as at 30 September 2015, at the rate 66,24 rubles per dollar.

All debt owed to Gazprombank, and VTB will be converted into rubles. Thus, the share of ruble-denominated debt after the conversion will increase from 35% to 60%. Interest rates are tied to LIBOR and the key rate of the CBR MosPrime instead.

“Due to partial capitalization of interest, ruble interest payments will be paid based on the rate of 8.75% per annum instead of the current 12,5%-14,5%” says Mechel.

The maturity of debt is extended until 2017-2022, (subject to the fulfilment of suspensive conditions). In addition, according to the company, the banks agree to write off a large portion of assessed fines and penalties. As collateral are real estate and equipment of the company and shares of the main subsidiaries and their sureties.

After the restructuring, in accordance with the repayment schedule, “Mechel” will have to pay for the debts of 551 million dollars, in 2017, 624 million in 2018 and 2019 — on 690 million in 2020 — 1,074 billion and after this date still 1,502 billion.

In particular, the terms of restructuring of debt to VTB, the agreement has been signed, provide a one year deferral of repayment of debt and four years maturity. Mechel notes that in discussing the increased grace period up to four years. Rate — the key rate of the CBR plus 2.35% to 6 January 2018, hereinafter — the key rate of the CBR plus of 2.99%.

With Gazprombank, the company has agreed to restructuring while executing suspensive conditions. The grace period of debt repayment will make in this case four years and three years — the maturity of the debt. Rate — the key rate of the CBR plus 1.5% but not less than 8.75% per annum.

The company says that the terms of restructuring with Sberbank being worked out and pre-agreed fixed payments in 2016-2017. Assumed four-year deferral of repayment of the debt subject to the fulfillment of suspensive conditions and a three-year maturity. Rate for ruble loans — the key rate of the CBR plus 1.5% (but not less than 8.75 per cent), in USD — 3M LIBOR + 7%, but not less than LIBOR 3M + 5%.

With a syndicate of international banks the terms of restructuring are also being considered. The grace period of debt repayment will be for one year (may be increased to four), with a repayment period of four years. All debts are denominated in US dollars, but the interest rate will be no more than LIBOR + 5.75%.

A special Committee of independent Directors, unanimously recommends approval of interested-party transactions, including taking into account an independent expert opinion obtained from Renaissance Capital, says Mechel.

The majority of the votes of minority shareholders is required for approval of related party transactions at an extraordinary meeting on 4 March.