Mechel's owner pledges 38 pct stake as collateral
MOSCOW, June 23 (Reuters) - The majority owner of Russian coking coal and steel producer Mechel (MTL.N), Igor Zyuzin, has put almost 38 percent of the company's shares up as collateral to obtain unspecified financing, a company document said.
The document, dated June 19 and filed with the U.S. Securities and Exchange Commission (SEC), says Zyuzin pledged the shares "in connection with certain financings" but does not provide any details on the lenders or the amount of money borrowed.
A spokesman for the New York-listed company declined to comment on the document and noted that the company does not comment on its shareholders' transactions.
Mechel is one of the most heavily indebted Russian coal and steel producers, with total debt of $5.4 billion as of Dec 31, 2008.
Overall, Russian sector players borrowed more than $30 billion to make acquisitions and increase production during the pre-crisis boom. [ID:nLU975877]
Mechel has breached a number of debt covenants since the downturn, forcing it to reclassify most of its debt as short-term. [ID:NL3346793]
The company expects to sign debt-restructuring agreements next month, including the restructuring of $1.0 billion of a $1.5 billion loan used to acquire Kazakh chrome miner Oriel Resources in 2008.
Earlier this month Deutsche Bank analysts also noted that Mechel is prepared to pledge a range of assets including 35 percent of its Chelyabinsk Steel Plant and 50 percent minus one share in Oriel Resources in order to restructure a separate $2 billion loan used to acquire the Yakutugol coal company.
The bank cited materials issued in conjunction with Mechel's June 30 annual shareholders' meeting (AGM).
"The most worrying thing is that even after restructuring the $1.5 bln Oriel bridge ($500m to be paid in 3Q09, followed by a one-year moratorium for principal payment) and the $2 bln Yakutugol PXF loan, Mechel still has to pay $913m in short-term debt in 3Q09 and $710m in 4Q09," the bank's analysts wrote.
"Add to that $723m in capex, over $300m in dividends and the likelihood of a negative free cash flow for FY09 and one can get a full picture of Mechel's liquidity challenges."
The SEC filing also stated that Zyuzin owns 66.8 percent of Mechel through a range of investment vehicles. (Reporting by Alfred Kueppers; Editing by Rupert Winchester)
