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“The current working option is the use of bridge funding for RZD from the National Welfare Fund with the funds’ subsequent return under state guarantees. That is, the state is eventually to give us funds to the authorized capital so that we could pay for this, because our financial status and investment program volume do not allow us to implement such projects independently. I think this is a state-level task,” he said.
Previous reports said the cost of the Mechel railway branch amounted to some 70 billion rubles ($2 billion). Yakunin said this sum was currently under review.
“We support in every possible way the actions of the government, aimed at stabilizing Mechel’s economic situation and are ready to take part in this,” the RZD head said.
Russian Deputy Prime Minister Arkady Dvorkovich on August 23 told ITAR-TASS that the negotiations on the bailout scheme for the Mechel mining and metallurgical company, running up a debt of 8.3 billon U.S. dollars, continued and would end in several days. He also said the negotiations were “constructive.”
The relevant agencies together with creditor banks, investment consultants and Mechel representatives are currently considering options for the company’s debt restructuring. The main creditors of Mechel are Sberbank ($1.3 billion), Gazprombank ($2.3 billion) and VTB Bank ($1.8 billion).
According to previous ITAR-TASS reports, the government had agreed upon two Mechel bailout schemes that would exclude the company’s bankruptcy. The removal of Mechel’s main shareholder Igor Zyuzin from control over the company at least temporarily was also considered. In addition, the company continues negotiations on the sale of its 70-billion ruble rail branch to Yakutia’s Elga coalfield to RZD.
In late August, Mechel offered to its creditors to convert the currency credits into rubles at the Central Bank refinancing rate of plus 1-2%.
No final decision on Mechel debt rescheduling has been made yet, and the date of the government’s next meeting on this issue has not been set.
Mechel group unites producers of coal, iron ore concentrate, steel, rolled stock, ferroalloys, high-added value products, and heating and electrical energy. The main shareholder Igor Zyuzun holds a 67.42-percent stake in the company. Mechel previously reported that Zyuzin’s Cyprus-based companies had reduced the share of the company’s secured stock from 41.57% to 27.22%