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. Last Updated: 07/27/2016

Mechel Seeks $2Bln to Pay for Mine

LONDON -- Coal miner and steelmaker Mechel has begun general syndication of a $2 billion loan to back its acquisition of coal assets in the Sakha republic, a banking source said Tuesday.

ABN Amro, BNP Paribas, Calyon, Natixis, Societe Generale and SMBCE have underwritten the loan, which is split between a $1.7 billion, five-year pre-export financing and a $300 million, three-year, unsecured loan. The margins are 150 basis points over the London interbank offered rate on the pre-export loan and 225 basis points on the unsecured facility, the source added.

New York-listed Mechel paid 58.2 billion rubles ($2.33 billion) last month to win an auction for 75 percent minus one share in Yakutugol and 68.86 percent of Elgaugol, plus associated infrastructure.

In October, Mechel announced that it had agreed on a bridge loan with VTB to pay for the acquisition. The syndicated loan will refinance that facility.

Mechel, the country's sixth-largest steelmaker, will assume 100 percent control of Yakutugol, having owned 25 percent plus one share prior to the auction. The company mines about 9 million tons of coal per year from three deposits in the Sakha republic.