Russia-based state-owned Sberbank reached a $1.3bn debt restructuring agreement with coking coal miner and steel producer Mechel PJSC after two years of discussions.
The bank agreed to restructure two of Mechel’s ruble-denominated loans of RUB 30bn ($449m), and another $427m loan. Mechel would repay a RUB 2.8bn loan taken from a unit of Sberbank Leasing.
As part of the agreement, Gazprombank’s unit would become the legal successor to a $423m and RUB 3.1bn loan that Mechel owes Sberbank.
Mechel had been unsuccessfully trying to alter its borrowing terms since 2014, following a slump in coal prices. Sberbank was the only major lender to hold out after Gazprombank and VTB Bank agreed to a restructuring in 2015.
Mechel will receive a grace period until April 2017 with loans maturing in April 2020 to be paid in monthly installments. Approximately 40% of the company’s interest payments could also get postponed.
The grace period on a major portion of debt could also get extended until January 2020 with a due date of April 2022 if VTB Bank agrees to similar conditions and if certain other conditions were met in 2016.
On 26 May 2016, Mechel’s shareholders will vote on a debt restructuring plan. This is the second time the shareholders would vote after the company’s previously failed attempt in March 2016 to garner enough votes from minority investors to approve its $5bn debt restructuring plan.