Andrei Kostin sat on Mechel

VTB became the main creditor of Mechel - almost 50 billion rubles were transferred to it from Sberbank.
07.11.2019
RBC
Origin source
VTB bought the entire debt of Mechel to Sberbank in the amount of about 50 billion rubles, a source close to the deal told RBC. A representative of VTB confirmed the fact that Mechel’s debt was transferred, but declined to comment further. Sberbank did not comment on the deal. Mechel did not respond to a request from RBC at the time of publication.

At the end of June 2019, Mechel’s total debt, according to the company, amounted to 411 billion rubles, of which more than 80% accounted for the three largest creditors - Gazprombank, VTB and Sberbank. Given the transaction, Igor Zyuzin’s company now owes VTB about 204.6 billion rubles, which corresponds to almost 50% of the group’s total debt portfolio. The second largest creditor of the company remains Gazprombank (142.6 billion rubles. Debt). RBC sent a request to Gazprombank.

The debt redemption transaction has additional conditions, says another RBC source familiar with VTB and Sberbank plans. According to the interlocutor, the transaction between the banks is part of a debt exchange scheme: Sberbank will receive Eurocement Group's debt to Filaret Galchev to VTB. Its size was not disclosed, it was only reported that the net debt of Eurocement Group in 2016 reached 100 billion rubles, of which the company owed about 65 billion rubles to Sberbank. At the time of publication in the Eurocement Group did not answer questions from RBC. The information that the transaction took place in the format of an exchange of debts between banks, including the Eurocement Group, was confirmed by another RBC source familiar with its terms.

What happens to loans and assets of Mechel, RBC understood.

What happens to Mechel debts

The problems with debts and their restructuring at Mechel began back in 2014 after a series of unsuccessful acquisitions of assets and infrastructure construction costs for the Elga coal deposit. Negotiations with banks were not easy: banks filed lawsuits against Mechel in Russian and foreign courts, while VTB announced its intention to bankrupt the metallurgical company. Sberbank held the toughest stance: if VTB and Gazprombank agreed to restructure Mechel’s debt by the summer of 2015, German Gref, the head of Sberbank, continued to criticize the company’s owner Igor Zyuzin and insist on gaining control over the company until April 2016.

But in the end, Sberbank and Mechel signed a restructuring agreement. One of the conditions of this agreement was the sale by Mechel of 49% in the Elgin project for 34.3 billion rubles. followed by partial repayment of debt to Sberbank - Gazprombank bought this stake.

Once again, the issue of credit restructuring faced the company last summer. In 2020, Mechel is due to begin repaying debt to major creditors, and in June 2019, the company submitted proposals to banks to restructure debt with a delay in the start of payments for 2024–2026. “Despite the fact that the company is stable and generates cash flow sufficient to fulfill all its current financial obligations, debt servicing and financing of capital expenditures, in the current circumstances this cash flow is not enough to fulfill all repayment obligations in the period 2020–2022 debt, ”the Mechel report for the first half of 2019 noted.

The company even asked Deputy Prime Minister Dmitry Kozak for help with the negotiations. Mechel expected restructuring of 340 billion rubles. debt due to its extension for six years with a grace period of four years. In addition, the company asked for help to return the 18 billion rubles that it invested in the Donetsk Electrometallurgical Plant (DEMZ), which was lost due to the conflict in Ukraine. Mechel promised to direct these funds to pay off debts to banks. There was no official reaction from the apparatus to this proposal.
“Apparently, Sberbank, with which negotiations had been intense before, could have opposed a second restructuring, and the repurchase of debt would allow VTB to expedite the procedure,” said Maxim Khudalov, head of the ACRA Sustainability Risk Assessment Group. But given the number of bankruptcies of private coal companies in the United States, coal prices will soon go up, which means that for VTB this may be the right strategic decision. In addition, the Mechel loan rate is quite high against the backdrop of declining corporate sector rates - 9.3%, the expert noted.

What happens to Mechel’s assets

The main investment project of Mechel is the Elginsky coal deposit with reserves of 2.2 billion tons of coking coal. The company has already spent more than 100 billion rubles on its development and construction of a driveway to it, including 77 billion rubles. spent on the construction of the Ulak-Elga railway.

Against the backdrop of negotiations with banks on restructuring in August this year, it became known that the company A-Property, founder of the telecommunications operator Yota, Albert Avdolyan, proposed to redeem a stake in Elga from Gazprombank. Having received an offer from him, the bank sent an offer to Mechel, which has the pre-emptive right to repurchase a share. The company accepted it and got time to seek financing for the transaction: the deadline for the purchase of 34% of the Elga project in Yakutia from Gazprombank and another 15% option expires on January 20, 2020. The transaction amount should be about 31 billion rubles. The company is looking for money in the market, sources say RBC. But without the consent of the largest creditors, Mechel cannot attract new debts and alienate assets.

The representative of Gazprombank - a member of the board of directors of Yakutugol, Daria Pravdina warned the company that the purchase of this stake by Mechel itself in the current conditions could threaten him with bankruptcy, since Elgaugol (owns a license for the Elginskoye field) will show losses in 2019 in the foreseeable future (up to ten years) it will be a loss-making enterprise, the development of which requires significant resources, which the company does not have and cannot attract.

Whether VTB could take part in financing the deal to buy back a stake from Gazprombank in the interests of Mechel, RBC's interlocutors did not forecast. The official position of the bank that it will not, - as VTB Head Andrei Kostin noted in October: “It is unlikely that we will lend to such a deal.” Then he suggested that Zyuzin’s company would be able to reduce debt to state banks if it sold part of the Elginsky coal deposit. “If they sell part of Elga, I hope that they will reduce the debt,” he noted.

According to Kostin, in April 2020, VTB will return to the issue of debt restructuring at Mechel: "There is a process of restructuring [debt], somehow the debt will be restructured anyway." “A big debt, in principle, is now serviced on schedule well. In April, we will return to this topic, ”announced the head of the financial group.

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