MOSCOW, October 2 (RIA Novosti) – Chief Executive Officer of the Russian metals giant Mechel, Oleg Korzhov, told RIA Novosti Thursday that he is positive about the company's prospects, while foreign banks are ready to consider restructuring the company's debt after main Russian creditors make their decision.
"It is a short term, 1-3 years, but we should go through it, and afterward Mechel's financial indicators will become many times better due to the profit from new projects. It is this profit that we and the lending banks count on. However, we would like to use this profit to pay off the debt, whereas the banks want to gain the very source of the profit," Korzhov told RIA Novosti
Moreover, Mechel is currently participating in the talks on selling its assets, viewing some of the creditors as potential customers.
"Mechel is ready to consider selling almost any of its assets," Korzhov emphasized.
The Mechel head stressed, however, that the lending banks are not seeking the company's bankruptcy.
"I think that if the banks had the objective to drive Mechel to bankruptcy, they would have already taken corresponding measures, as, for example, Alfa Bank early this year. But even controlled bankruptcy may be very unpredictable not only from the point of view of the invested assets, but also considering other consequences," Korzhov told RIA Novosti in an interview Thursday.
Commenting on the conditions proposed by the banks that consider restructuring the country's debt, Mechel General Director stated they infringe the rights of the shareholders.
"I don't think the conditions proposed by the banks are fair for the company's shareholders. In fact, by using this scheme banks seek to gain much more than what they are entitled to. Balance of interests of shareholders and creditors is tilted for the creditors' favor," Korzhov explained.
According to Korzhov, Mechel has approximately $1.7 billion in debt to foreign banks and one creditor must be paid $1 billion already in December.
"Foreign banks have taken a ‘waiting position’ and will see how the main creditors will act and then make a decision from that," Korzhov said.
"Foreign banks have confirmed their readiness to consider a restructuring, but if Mechel falls under sanctions, then they will be prohibited to do this," Korzhov said.
Korzhov said that it is possible that Mechel could fall under western sanctions.
"Currently all three [Russian] state banks are already under [western] sanctions so if in total they receive more than 50 percent of the stocks of any company, then sanctions are expanded to include that company automatically. We have already received an according letter of information from our foreign creditors with a warning of this type of risk appearing," Korzhov said.
Mechel is one of Russia's major mining and metals companies, founded in 2003 and comprising more than 20 enterprises. Mechel produces coal, iron ore, steel, rolled products, ferroalloys, heat and electric power. Its products are marketed in Europe, Asia, North and South America and Africa.
In 2013, Mechel sought to sell its US asset, coal mining complex Bluestone, acquired in 2009 in attempts to handle its debt. US investment bank JP Morgan was hired to assess the company's options with respect to Bluestone. The same year, the company's employees experienced delays in receiving their salaries.
At the moment, Mechel's debt to three major Russian banks – Gazprombank, VTB Bank and Sberbank –amounts to $5.1 billion, which is 64 percent of the company's total debt.