Mechel debt restructuring programme

Overview:

• Mechel - one of Russia's leading mining and metals companies - has undergone an extensive restructuring programme to prevent the bankruptcy of the group.
• Following a series of acquisitions, the company unexpectedly ran into problems at the end of 2013 when its stock value dropped 41.35% in a single day and then a further 18% the following day. Its market capitalisation went from $24 billion in May 2008 to $830 million in 2013.
• As a result, the company was forced to restructure its approximately $9.6 billion of debt to avoid bankruptcy. Sberbank, VTB and Gazprombank held 67% of that with a further 20-25% covered by outstanding bonds.
• The restructuring programme involved several years of negotiations with creditors and resulted in a number of different solutions, including: 
• • Gazprombank R34.3 billion million acquisition of Elguagol
  • Mechel R10 billion bond restructurings
  • Mechel R130 billion restructuring of Gazprombank debt
  • Mechel $1 billion syndicated loan restructuring

Jon Moore - Journalist