MECHEL COMPANY IS ON THE VERGE OF BANKRUPTCY

The mining and metals company Mechel, which includes more than 20 enterprises, announced that it was unable to pay off billions of dollars in debt. According to a report released by the holding, the debt to creditors amounted to 250 billion rubles. The company is still unable to repay its debts on loans taken 10 years ago to finance the construction of industrial facilities (first of all, a rail and structural steel mill).

The head of Mechel is tycoon Igor Zyuzin, whose family owns 51.54% of the holding's shares. Gazprombank owns another 5.45% of the company's shares. The remaining assets are in free float. Mechel PJSC ended last year with a revenue of RUB 265 billion and a profit of over RUB 800 million.

However, considering that by the end of the year, the company's net debt reached 325.6 billion, Mechel was on the verge of default.

On January 19, the holding's management informed the SEC of the overdue debt to foreign creditors, to whom the group of companies owed 33 billion rubles, including the largest share of the debt of 29 billion rubles that was to be received by BNP Paribas. The ECA loans were not repaid as well.

In Russia, the situation turned out to be more favorable for the company. In 2020, having entered into lucrative agreements with VTB and Gazprombank, the company restructured a significant part of its debt, extending the payment deadlines until March 2027 (with the option to extend it for another three years). This happened after the company closed contracts for the sale of the Elga coal deposit.

By the summer of 2020, Mechel managed to deal with 88% of its debt obligations.

Experts note that the bankruptcy of the Mechel holding in the current situation is disadvantageous to foreign creditors, including BNP Paribas and UniCredit. A significant part of the assets pledged to the state banks in the process of restructuring will not allow foreign investors to get what they could count on. It has not yet been possible to conclude the necessary agreements.