Russian coal and steel group Mechel OAO said April 4 that it agreed to sell a 49% stakein its flagship Elgacoal mine in Russia to state-owned Gazprombank for 34.3 billion Russian rubles,in a deal that provides the troubled miner and steelmaker with much-needed breathingroom from creditors as it prepares to refinance its debt pile.
In accordance with the deal, Mechel will sell to Gazprombanka 49% stake in each of Elgaugol OOO — the project operator and owner of the subsoillicense — Ulak-Elga railroad owner Elga-Doroga OOO and Mecheltrans-East OOO, whichis the railroad's transport operator, by June 30.
According to the statement, the deal also gives Gazprombank theright to sell the holdings back to Mechel in the future.
Mechel, which invested about 100 billion rubles into the Elgaproject, will use the funds raised under the sale to pay down debt owed to Sberbank.Mechel's agreement on debt restructuring with Sberbank is contingent on the coalgroup paying off some of its debt.
The deal with Gazprombank gives Mechel time to restructure approximatelyUS$5.1 billion in debt this year, under a dealhammered out with creditors in February.
The restructuring deal needs approval from over 50% of the company'sminority shareholder base — a quorum that Mechel failed to reach at a vote staged in Moscow March 4.
According to Mechel, the vote in March failed because insufficientnumbers of minority shareholders took part in the meeting.
Approximately 67% of Mechel's shares are controlled by companyfounder and chairman, Igor Zyuzin, with the remainder in free float.
The news of the sale came at the same time as local Russian pressreports suggested lawmakers were contemplating a legal amendment making it easierfor Russian companies to gain needed approval from shareholders for refinancing.
Interfax newswire reported April 4 that lawmakers were consideringa change allowing companies to adopt resolutions at shareholder meetings on thebasis of votes cast at the meeting, rather than as a percentage of total votingrights outstanding.
Recently, Mechel also agreed to renew a deal to supply nearly 1 million tonnes of cokingcoal over the next year to China's Baosteel Resources, a subsidiary of
As of April 1, US$1 wasequivalent to 68.02 Russian Rubles.