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. Last Updated: 07/27/2016

Pugachyov's OPK, Mitsui in Coal Talks

Senator Sergei Pugachyov will discuss the sale of a stake in a large Siberian coal deposit to Japan's Mitsui next week, his holding company said Friday.

United Industrial Corporation, also known by its Russian acronym OPK, is seeking cash to support its banking subsidiary, International Industrial Bank, also known as Mezhprombank, which defaulted on its eurobond this month.

OPK said it wanted to sell up to 75 percent in its coal mining subsidiary, YPK, which holds an exploration license to the Yelegestskoye deposit with estimated reserves of 1 billion tons of high-quality coking coal.

OPK said it valued its coal mining subsidiary at $5 billion and planned to retain no less than 25 percent in the unit. The company also said it was in talks with China's Shenhua Energy over a YPK stake sale.

A source in OPK told Reuters that the company planned to use the cash to make payments on the 200 million euro ($258 million) eurobond and redeem 32 billion rubles ($1.05 billion) of uncollateralized loans owed to the Central Bank.

Pugachyov, who represents the republic of Tuva in the Federation Council, had been seeking 90 billion rubles for two shipyards that produce military ships and commercial vessels.

The assets have now been placed as collateral at the Central Bank — as part of the IIB loan restructuring deal — and are later expected to be bought by the state-run United Shipbuilding Corporation.

The state company, also known as OSK, is willing to pay less than one-third of the original asking price, sources close to the deal said earlier this month.