MOSCOW Jan 22 Heavily-indebted Russian miner
Mechel disclosed on Wednesday details of easier
borrowing terms it agreed with banks in late 2013 designed to
give it some breathing space to turn itself around.
Mechel, controlled by billionaire Igor Zyuzin, like other
Russian steelmakers invested heavily in expansion before the
2008 financial crisis hit demand, forcing it to borrow to
Banks including Russia's largest lenders, Sberbank
and VTB, granted more lenient conditions for the
coal-to-steel group on $6.5 billion of its more than $9 billion
in net debts until Dec. 31 2014.
But some of these requirements will be tightened up slightly
at the end of 2014, Mechel said in a report posted to its site.
A new higher debt-to-earnings cap along with other easier
debt ratio terms are designed to grant Mechel some extra time to
deal with its substantial obligations to lenders.
Under the latest terms, the cap on Mechel's debt to core
earnings ratio, a key gauge of its ability to service its debts,
is raised to 10.0 from the previous 7.5. The firm's recorded
debt-to-earnings ratio was 10.0 as of July 30.
The report shows that prior to the new debt agreements,
Mechel and its subsidiary Mechel Mining had exceeded five key
The new requirements, which include a looser cap on Mechel's
earnings-to-net interest expenses ratio, allowed the company to
report earnings for the second and third quarters in December
without the risk of breaching its debt agreements.
The company, which has yet to report full-year results for
2013, plunged further into negative territory in the first nine
months of last year with a net loss of $2.2 billion.
The firm plans to sell off its remaining non-core assets in
the coming year to help cover $2 billion in debt falling due for
repayment in 2014.
Loans from Russian banks - mainly VTB, Gazprombank and
Sberbank - account for around 60 percent of Mechel's debt, and
foreign banks another 22 percent, according to the company.
(Reporting by Svetlana Burmistrova; Writing by Alessandra
Prentice; Editing by Douglas Busvine and Jane Merriman)