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Owner replacement crucial for mining giant Mechel’s rescue — economic aide

July 30, 2014, 15:51 UTC+3 NOVO-OGARYOVO
The Russian government has agreed two schemes to rescue the debt-laden mining and metals giant Mechel from bankruptcy
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NOVO-OGARYOVO, July 30. /ITAR-TASS/. The Russian government has agreed two schemes to rescue the debt-laden mining and metals giant Mechel from bankruptcy, presidential economic aide Andrei Belousov said on Wednesday.

Both options envisage at least a temporary replacement of the company’s owner, the economic aide said.

One option is for state development corporation Vnesheconombank to join Mechel’s shareholders and the other scheme is for the company’s creditor banks to participate in the mining giant’s capital without Vnesheconombank, Belousov said.

“The choice has to be made by Mechel’s creditors and owners,” the economic aide said, adding a decision on the company’s fate was likely in the coming days.

Founded in 2003, the Russian largest mining and metallurgical company Mechel is on the brink of bankruptcy over its gigantic debt. The company’s net liabilities exceed $8.3 billion.

Russia’s largest lenders Gazprombank, Sberbank and Gazprombank are among Mechel’s major lenders.

VTB Group CEO Andrei Kostin said in mid-July that the state should decide on whether it would participate in the company’s rescue and which rescue plan should be used in this case. If the government decides against its participation, creditor banks should elaborate some common approach, Kostin said at the time.

The VTB Group CEO also said that Mechel was a working asset and its problems would be resolved in one way or another.

Russian Industry and Trade Minister Denis Manturov earlier said the government was discussing various options of Mechel’s rescue, except financial injections from the budget.

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