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Russia’s MDM Bank still can manage Mechel’s debt

The metals and mining group's net debt amounts to $8.1 billion
Chelyabinsk Metallurgical plant, part of the Mechel Group ITAR-TASS/Evgeniy Khazhei
Chelyabinsk Metallurgical plant, part of the Mechel Group
© ITAR-TASS/Evgeniy Khazhei

MOSCOW, November 26 (TASS) Russia’s MDM Bank can still participate in the management of metals and mining group Mechel’s debt, CEO Timur Avdeyev told reporters on the sidelines of a financial forum on Wednesday.

“It is a legal entity, not physical… I would like to say that we as a bank retained an opportunity to participate in decisions concerning this debt’s management,” he said.

In October MDM Bank sold Mechel’s debt backed against a 15% stake in the company to a large creditor, whose name was not disclosed.

Mechel, which was actively buying assets with loans amid the 2008-2009 global economic slump, cannot service its debt, which has soared to over $8 billion. The metals giant is currently in talks with its major lenders to try to agree on rescheduling its liabilities.

Mechel’s major creditors are Russia’s largest lender Sberbank ($1.3 billion), Gazprombank ($2.3 billion) and VTB Bank ($1.8 billion).

Russian government officials earlier discussed various options of restructuring Mechel’s debts and stabilizing its financial position, while also considering a possibility of the company’s bankruptcy.

VTB and Sberbank filed lawsuits worth about 4.5 billion rubles ($96 million) against Mechel in autumn to recover overdue debts.

Mechel’s net debt amounts to $8.1 billion.

The Mechel group incorporates coalmining divisions and producers of iron ore, steel, rolled stock, ferroalloys, high value added items, and thermal and electric power. It employs a total staff of 70,000. Its main shareholder Igor Zyuzin owns a 67.42% stake.