MOSCOW, Aug 15 (Reuters) - Russian coal and steel producer Mechel expects to reach an agreement with its main creditors in the near future about pushing back its debt repayments, the company said on Thursday.
Mechel, which has been in restructuring talks with its lenders for several years, has already asked banks to push back its debt repayments to 2024-2026 from 2020-2022.
“We are approaching the period of our main debt’s maturity in accordance with loan agreements we made with lender banks in 2016,” Mechel chief executive Oleg Korzhov said in a statement.
But Korzhov said the company’s cash flow was not sufficient to fulfil all its 2020-2022 dept repayment obligations, though cash flow did meet the company’s current capital expenditure and debt servicing needs.
“We have accordingly called on our lenders with an offer on moving the debt maturity to a later period. The banks are now considering our offer, and we expect to reach an agreement on this issue in the near future,” Korzhov said.
Mechel, controlled by Russian businessman Igor Zyuzin, borrowed extensively during the commodities boom in the 2000s. Its lengthy restructuring following the 2008 financial crisis was exacerbated by Russia’s economic crisis in 2014.
In July, the company’s debts to Russia’s three largest state-controlled banks - Sberbank, VTB and Gazprombank - stood at 347.5 billion roubles ($5.25 billion).
Mechel’s first-half results, published on Thursday, showed net debt decreasing by 12 billion roubles to 411 billion roubles, not including fines and penalties, with the company’s net debt to EBITDA ratio at 6.4 times.
The results showed that Mechel’s net profit in the second quarter stood at 1.4 billion roubles, compared to 11.34 billion roubles in the previous quarter.
Coking coal sales in the second quarter were up 13% at 1.9 million tonnes compared to the previous three months, while steel production rose to 932,000 tonnes from 930,000 tonnes, the company said.
Mechel’s shares on the Moscow exchange were trading down 1.78% on the day at 1326 GMT. ($1 = 66.1850 roubles) (Reporting by Anastasia Lyrchikova. Writing by Polina Ivanova. Editing by Jane Merriman)