In accordance with the agreement, Mechel sold its share of 51% in OOO "'gaugol'", OOO "El-way" and LLC "Mechel TRANS Vostok" OOO "A-property". The amount of the transaction amounted to 89 billion rubles, including the premium for a controlling stake, the buyer fully repaid the liabilities of "Mechel" before the state Corporation for the development of the web.Russia in the amount of 107 million U.S. dollars.
Simultaneously with the transaction of purchase and sale, Mechel has signed agreements on debt restructuring with Bank GPB (JSC) and VTB Bank (PJSC), the main condition of these agreements was the direction of the proceeds from the sale of 51% shares in the project of the Elga coal complex for repayment of debt to the two banks in proportion to their share in debt of Mechel Group. Thus, 57.4% of the transaction amount will be allocated to early repayment of the debt to VTB Bank and 42.6% - on repayment of debt to the Bank GPB. The result of the rejection of the option of Gazprombank 49% of Elga the total amount of reducing the debt burden of the company will amount to 145 billion rubles.
the repayment Period is extended by 7 years until March 2027 with the possibility of an additional extension of 3 years. Other significant terms on credit lines, including interest rates and collateral, remain unchanged. The total amount of the restructured obligations to Gazprombank and VTB Bank after the repayment of debt with funds received from the sale of the Elga coal complex will total 237 billion rubles.
"In the current economic environment and the existing level of debt, we made a difficult but informed decision on the sale of the Elga coal complex. Resulting from the transaction, the funds will be used to repay a portion of credit liabilities to banks VTB and Gazprombank. Reducing the financial burden will contribute to implementation of investment program aimed at increasing production and processing of coal at our facilities in Kuzbass and Yakutia, as well as the growth of production volumes of high-margin products in the steel division. This will allow us to maintain financial and social stability in the companies and to ensure the further development of the Group "Mechel"", – said General Director of JSC "Mechel" Oleg Korzhov.
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PAT "Mechel"
Catherine Wiedemann
Tel: +7-495-221-88-88
ekaterina.videman@mechel.com
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Mechel is a global mining and metals company. The company's products are exported to Europe, Asia, North and South America, Africa. Mechel unites producers of coal, iron ore, steel, rolled products, ferroalloys, heat and electric energy. All enterprises work in a single production chain, from raw materials to products with high added value.
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OOO "El'gaugol '" company, which is developing the Elga coal Deposit in the South-Eastern part of Yakutia. This is one of the world's largest deposits of high quality coking coal reserves of about 2.2 billion tonnes in accordance with JORC standards. The field presents a powerful (up to 15 m) shallow reservoirs with overlying deposits of small capacity. Production at the field began in 2011. In the same year was opened through the movement built "Mechel" train 321-kilometer branch line connecting the Deposit with Baikal-Amur railway. The Elga Deposit is available for mining, which is much cheaper, more efficient and safer mine. On the Russian market the coal for metallurgy of the Elga stamps are scarce, as they have high quality characteristics.
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Certain statements in this press release may contain projections or forecasts regarding future events or the future financial performance of JSC "Mechel" in accordance with the provisions of Legislative act of the USA about the reform of the judicial process in respect of securities in 1995. We wish to caution You that these statements are only predictions and that actual events or results may differ materially from those stated. We do not intend to revise or update these statements. We refer You to the documents Mechel periodically submit to the Commission securities and exchange Commission, including the annual report on Form 20-F. These documents contain and identify important factors, including those listed under "risk Factors" and "note regarding forecasts contained in this document" in the Form 20-F. These factors can cause significant discrepancies between actual results and our assumptions and projections regarding future events, including, without limitation, the achievement of anticipated levels of profitability, growth, cost-effectiveness of our recent acquisitions, the impact of competitive pricing, ability to obtain necessary regulatory permits and authorizations, condition of the Russian economy, political and legal environment, volatility in stock markets or the value of our shares or ADRs, financial risk management and the impact of General provisions of business and global economic conditions.
22.04.2020
