Open / Close Advertisement

Mechel Announces Three Year Continuation of VTB Bank Loan

12/04/2009 - Mechel OAO and VTB Bank reach agreement for a three-year prolongation of the 15 billion rubles loan granted to Mechel in 2008.

Mechel OAO has reached agreement with VTB Bank for a three-year prolongation of the 15 billion rubles loan initially granted to Mechel in 2008.
 
VTB Bank opened credit lines totaling 15 billion rubles at the end of 2008 to Mechel’s subsidiaries Yakutugol OJSHC, Southern Kuzbass OAO and Chelyabinsk Metallurgical Plant OAO. Initially, credit period was one year. Mechel used the credit facilities, which had an initial term of one year, to fund the operations of these subsidiaries.
 
“Having completed restructuring of the syndicated loans in summer this year, we keep on working to optimize our credit portfolio, and focusing on the use of long-term financial tools,” commented Stanislav Ploschenko, Mechel’s CFO. “In this regard we highly appreciate our partnership with VTB Bank. We cooperate not only in the sphere of commercial crediting but in the investment banking area as well. This was confirmed by VTB Bank’s participation in placing of one of our bonds’ tranche in October this year.
 
The partners noted that the new prolongation agreement is based on strong and long-term relations between them, as well as their mutual interest in future cooperative development. Within the framework of the Agreement on Long-term Mutually Beneficial Cooperation that the companies entered into in April 2008, they describe the prolongation as the next step toward implementing Mechel's projects and development plans.
 
“Being a one more logical step in cooperation of our companies, this prolongation agreement will allow Mechel to bring a significant share of its short-term loans into the long-term with amortized repayment schedule from funds sourced from operational activities of Mechel’s plants,” noted Ploschenko.
 
The new prolongation agreement provides for interest payment during the first 2.5 years only with further monthly repayment of the principal debt.
 
One of the leading Russian companies, Mechel’s business includes four segments: mining, steel, ferroalloy, and power. Mechel unites producers of coal, iron ore concentrate, nickel, steel, ferrochrome, ferrosilicon, rolled products, hardware, heat, and electric power. Its products are marketed domestically and internationally.