By Andrey Ostroukh
ST PETERSBURG, Russia--Russia's second largest bank VTB(JSCVL)
and steel producer Mechel OAO (MTL) have reached a preliminary
agreement, which gives the indebted company hope that it may avoid
bankruptcy, VTB's president Andrei Kostin said Friday.
VTB and Mechel have informally agreed that the bank will
restructure amortization of the metal producer's main debt and will
let it cover 2015 and 2016 obligations in 2018 and 2019,
respectively.
VTB will also ease the debt burden for Mechel, which rose due to
an unexpected emergency monetary tightening by the central bank in
December -- when the key rate was hiked to 17% from 10.5%.
In return, the debtor will have to pay back around 4 billion
rubles ($71.2 million) in debt delinquency and provide additional
collateral and guarantees, as agreed in a memorandum signed by VTB
and Mechel.
"If Mechel fulfils the obligations, we plan to sign the
restructuring deal in late June or early July. If not, we will turn
back to court procedures," Mr. Kostin said.
Mechel, which is controlled by the billionaire Igor Zyuzin and
owes about $5.1 billion to Russia's three largest banks, has been
on the verge of bankruptcy for months. Government officials have
repeatedly said that they see no other solution but to bankrupt the
miner or convert the debt into shares.
Last year Mr. Kostin said that Mechel creditors will consider
proposals by the company to save it from bankruptcy and restructure
its debt, but there was "no scenario apart from the fairy-tale
one."
Mechel shares rose to RUB72.4 a share on the Moscow exchange
following Mr. Kostin's statement, gaining 8.3% on the day by 0840
GMT.
Write to Andrey Ostroukh at andrey.ostroukh@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires