Mechel, one of the leading Russian mining and steel groups, has announced the signing of agreements to refinance its short-term credit facilities totaling $2.6 billion, raised for the acquisition of Yakutugol Holding Company and Elgaugol in October 2007, and of Great Britain-based Oriel Resources in April 2008.
Specifically, Mechel refinanced $1.6 billion at LIBOR rate +6 percent, of a $2 billion facility used for the acquisition of coal miners Yakutugol and Elgaugol, both of which are located in the Russian Federal Republic of Sakha Yakutia (Yakutia). The maturity period provides for equal monthly installments from September 2009 to December 2012. The remainder of the credit facility of $400 million was repaid earlier with the company's own funds according to the agreed schedule.
In addition, Mechel's $1.5 billion credit facility used for the acquisition of London-based nickel and chrome mining and processing company Oriel Resources has been refinanced in the amount of $1 billion at LIBOR rate +7 percent. The maturity period provides for equal monthly installments from July 2010 to December 2012. The remainder of the credit facility of $500 million was repaid from funds raised from a three-year loan from Gazprombank according to the agreement signed by the company in February 2009.
"As a result of the credit refinancing, the short-term debt of the company of $2.6 billion will be again reclassified as long-term debt in corporate financial reporting making performance of financial and operational activities much easier. Moreover, the refinancing structure has been modeled assuming that even if the current levels of pricing for Mechel's products, which are not the highest levels, continue, the company will face no difficulties in meeting its financial obligations," Mechel's CFO Stanislav Ploschenko commented.
As of March 31, 2009, Mechel's total debt stood at $5.8 billion. The company's cash and cash equivalents amounted to $953.3 million at the end of the first quarter of 2009, while its net debt amounted to $4.9 billion.