MOSCOW (Reuters) - Russian coal miner Mechel (MTLR.MM) is selling its ferroalloy assets to Turkey’s Yildirim Group for $425 million and will use the proceeds to shrink its debt of more than $9 billion as well as invest in core projects, it said.
The coal, iron ore and steel group, one of Russia’s largest, has cut investments and put non-core assets on the market to service the billions in debt it amassed in a dash for growth before the 2008 financial crisis.
“The funds our company will get from this deal will help the company to deleverage and continue to finance its priority development projects,” Mechel’s Chief Executive Evgeny Mikhel said in a statement on Thursday.
The company’s key project is the Elga field in Siberia, one of the world’s largest coking coal reserves, where development has for decades been blighted by inadequate transport links. The company needs funding before it can proceed.
The assets Mechel is selling to Yildirim Group, Turkey’s biggest chrome ore producer, include its Kazakh mining plant with probable chrome ore reserves of 20 million tonnes and its Tikhvin plant in Russia, which produces 120,000 tonnes of ferrochrome per year.
Mechel’s Moscow-listed shares, which have lost around 90 percent in value since their peak in early 2011, were top of the index at 1240 GMT, trading up 5.1 percent. The New York market, where Mechel (MTL.N) is also listed, had yet to open.
Reporting by Alessandra Prentice; Editing by Anthony Barker