UPDATE 1-Russia's Mechel signs $1.3 bln loan agreement with VTB
* Loan worth 40 bln roubles ($1.28 bln
* Mechel's total debt $9.1 bln
* Shares up 6.4 pct
MOSCOW, April 10 (Reuters) - Heavily indebted Russian miner Mechel said it had signed a 40 billion rouble ($1.28 billion) agreement with Russian bank VTB, refinancing loans due for repayment this year and buying time to dispose of assets.
The deal announced on Wednesday comes a week after the steel and coking coal producer, which has total debt of $9.1 billion, won a breathing space from lenders when it renegotiated the terms of a $1 billion loan.
"Securing a new credit agreement with VTB Bank will enable the company to refinance a large share of its loans which are due to be repaid in 2013, which will significantly improve the group's debt structure in the next 12 months," Chief Financial Officer Stanislav Ploschenko said in a statement.
Mechel has had to cut investments and put non-core assets up for sale to service the debt it amassed to fund its expansion before the 2008 financial crisis sent steel and coal prices tumbling.
China's Baoshan Iron and Steel (Baosteel) is in talks with Mechel to buy a 25 percent stake in the company's mining unit for up to $1.25 billion, Russian media reported earlier on Wednesday.
Mechel Mining, which is developing the huge Elga coal deposit with proven reserves of 2.3 billion tonnes, accounted for over 80 percent of the Mechel's adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) in the third quarter of 2012.
A spokesman for Mechel said the company was in talks with a number of potential investors over the sale of the stake, but declined to comment on the report about talks with Baosteel, China's biggest steelmaker by market value.
Russia's state anti-monopoly service FAS said it had not yet received any applications regarding a Mechel Mining deal.
Shares in New York-listed Mechel, which have lost over 90 percent in value since their peak in 2008, were trading up 6.4 percent at 1437 GMT.
Mechel said the VTB loan had a 15-month grace period with final repayment due in five years. The interest rate will depend on the company's net debt to EBITDA ratio and is due to decrease with the company's deleveraging.
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