MECHEL, VNESHECONOMBANK SIGN AGREEMENTS FOR SECOND AND THIRD CREDIT LINES TO
FINANCE ELGA COAL COMPLEX DEVELOPMENT
Moscow, Russia — March 14, 2014 – Mechel OAO (NYSE: MTL), one of the leading
Russian mining and metals companies, announces that project company Elgaugol
OOO, which is part of Mechel Group, and State Corporation “Bank for Development
and Foreign Economic Affairs (Vnesheconombank)” signed agreements for the second
and third credit lines of project financing for developing Elga Coal Complex’s
first phase, for 2.085 billion US dollars and 418.7 million US dollars
respectively.
The second credit line, totaling 2.085 billion US dollars, will be used to
finance construction of Elga Coal Complex’s facilities until the complex’s coal
mining and processing capacity reaches 11.7 million tonnes of run-of-mine coal a
year, as well as completion of works aimed at increasing the Ulak-Elga railway’s
capacity.
The third credit line totaling 418.7 million US dollars will be used to fund
expenses on paying Vnesheconombank’s interest and fees for the second credit
line until Elga Coal Complex’s first-phase facilities are launched, as well as
to repay the 150-million-dollar bridge loan — the first credit line granted
Elgaugol OOO in October 2013.
49% of Elgaugol OOO’s shares, as well as the project company’s movable and real
property will be offered as security on these credit lines. Vnesheconombank will
also acquire 0.01% of Elgaugol OOO’s equity capital with following repurchase.
Vnesheconombank’s (VEB) Supervisory Board approved the agreement granting Mechel
OAO project financing totaling 2.5 billion US dollars in September 2013. The
loan has a tenor of 13.5 years.
“We highly value our cooperation with Vnesheconombank, which lends support to
our company in a fairly volatile period for the industry and the global
financial market. Thanks to this loan we have fully resolved the issue of
financing for the Elga project, which will be developed regardless of volatility
in commodity markets,” Mechel OAO’s Chief Financial Officer Stanislav Ploschenko
said.
Note to editors:
State Corporation “Bank for Development and Foreign Economic Affairs
(Vnesheconombank)” is a key instrument for the state economic policy aimed at
eliminating infrastructure limitations for economic growth, improving the
efficiency of developing natural resources, developing high-tech industries,
realizing innovative and production potential of small and medium-sized
businesses, providing support for exports of Russian products, works and
services.
Elga, located in southern Yakutia, is Russia’s largest and one of the world’s
largest deposits of high-quality coking coal. Its reserves are estimated at 2.2
billion tonnes according to JORC standards.
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Mechel OAO
Ekaterina Videman
Tel: + 7 495 221 88 88
Ekaterina.videman@mechel.com
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Mechel is an international mining and steel company which employs over 80,000
people. Its products are marketed in Europe, Asia, North and South America,
Africa. Mechel unites producers of coal, iron ore concentrate, steel, rolled
products, ferroalloys, heat and electric power. All of its enterprises work in a
single production chain, from raw materials to high value-added products.
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Some of the information in this press release may contain projections or other
forward-looking statements regarding future events or the future financial
performance of Mechel, as defined in the safe harbor provisions of the U.S.
Private Securities Litigation Reform Act of 1995. We wish to caution you that
these statements are only predictions and that actual events or results may
differ materially. We do not intend to update these statements. We refer you to
the documents Mechel files from time to time with the U.S. Securities and
Exchange Commission, including our Form 20-F. These documents contain and
identify important factors, including those contained in the section captioned
“Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in our
Form 20-F, that could cause the actual results to differ materially from those
contained in our projections or forward-looking statements, including, among
others, the achievement of anticipated levels of profitability, growth, cost and
synergy of our recent acquisitions, the impact of competitive pricing, the
ability to obtain necessary regulatory approvals and licenses, the impact of
developments in the Russian economic, political and legal environment,
volatility in stock markets or in the price of our shares or ADRs, financial
risk management and the impact of general business and global economic
conditions.