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. Last Updated: 07/27/2016

Mechel Wins Refinancing for $2.6Bln of Loans

Mechel, the coal and steel producer run by billionaire Igor Zyuzin, said Monday that it agreed to refinance $2.6 billion of loans in the biggest foreign-debt restructuring by a Russian company since the credit crisis began.
Mechel refinanced $1.6 billion of a $2 billion loan used to acquire the Yakutugol and Elgaugol coal fields in October 2007, the company said in a statement. The debt was refinanced at 6 percentage points over the London interbank offered rate. Mechel also refinanced $1 billion of a $1.5 billion loan used to acquire chrome and nickel producer Oriel Resources in 2008 at 7 percentage points over Libor.
The global financial crisis cut access to funding for all but the highest-rated Russian firms, forcing companies to rely on loans from domestic banks or the ruble bond market.
“Mechel’s renegotiation of debt terms could potentially become a signal for others to look for more favorable restructuring terms,” said Stanislav Ponomarenko, a fixed- income analyst at ING in Moscow. Russian companies have $62.6 billion of foreign-currency debt due this year, Central Bank data show.
The $900 million of Mechel’s old loans not covered by the new facilities have been repaid with the company’s own funds and a loan from Gazprombank. The new debt is due December 2012.