Russian mining firm Mechel has signed an agreement with over 25 banks to amend the terms of its US$1bn pre-export facility due to tight market conditions.
The company expects to breach some of the financial covenants under the facility “due to uncertain market conditions and a period of decline in market prices for its products”, but reached the waiver agreement with banks “in a very short time”.
Mechel declined to reveal the new conditions of the deal or the names of the banks involved when contacted by GTR, but said the changes will increase its financial and operational flexibility in volatile financial and commodity markets.
The firm’s chief financial officer, Stanislav Ploschenko says: “The international bank syndicate’s decision once again confirms their high trust in Mechel Group as a quality borrower despite volatility on our key markets. By their agreement, the lenders demonstrated Mechel their support for its development strategy, where ongoing deleveraging measures are a key part. It must also be noted that the agreement with the international lender bank syndicate will enable the group to continue implementing several key large-scale investment projects announced earlier, aimed at consolidating its leading positions in mining and steelmaking.”
In December 2012, the firm obtained a 12-month grace period for a US$1bn syndicated pre-export loan signed in September 2010, arranging for repayment to take place in equal monthly instalments until August 2015.
At the time, Ploschenko said the old syndicate had entered the amortisation stage, which would have required Mechel to set aside some US$600mn of liquidity in order to repay it by the end of 2013. “Amending this credit is a key step in cutting down short-term debt through securing a grace period,” he added.