May 26, 2014 / 7:32 AM / 3 years ago

Creditors might seek to oust Mechel co-owner -newspaper

MOSCOW, May 26 (Reuters) - A group of creditor banks of indebted Russian coalminer and steelmaker Mechel may seek the removal of co-owner and chairman Igor Zyuzin and take control of the firm, business daily Vedomosti reported on Monday.

Zyuzin is a controlling shareholder in Mechel, has been hit by weak prices for its products, forcing it to sell loss-making assets and to negotiate delayed debt repayment with creditors.

Replacing the management with bank representatives so the creditors have full control of Mechel’s operations is one option being discussed by creditor committees, Vedomosti quoted a source with one of the banks as saying.

Under a second scenario creditors would take control of the business through a debt-for-equity deal and then sell assets, the source said.

A spokesman for Mechel said the company was communicating with creditors regarding its financial stabilisation but was not discussing the options described in the Vedomosti report.

Mechel currently has a net debt of $8.6 billion. Its biggest creditors were Gazprombank, VTB and Sberbank as of April 10. (Reporting by Maria Kiselyova and Polina Devitt; editing by Jason Neely)

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