Mechel OAO, one of the leading Russian mining and metals companies, reports signing long term agreements with Sberbank of Russia OAO on opening several credit lines to Southern Kuzbass Coal Company OAO for a total of RUB 24 billion.

Sberbank of Russia OAO opened four credit lines for Southern Kuzbass Coal Company OAO for a total of 24 billion rubles for a period of 5 years with 3 year grace period. For two of these credit lines, funds are provided in the form of a bi currency agreement with a built-in derivative instrument which enables us to bring down the interest rate on the loan. Yakutugol Holding Company OAO, Mechel Mining OAO and Mechel OAO act as guarantors of the facility.

Mr Stanislav Ploschenko CFO of Mechel OAO said that “We greatly value our ties with Russia’s largest state bank our longstanding and reliable partner, and are glad that we managed to reach a mutually profitable agreement on attractive terms despite the current volatility of global financial markets. The loaned funds will be used exclusively for refinancing the Group’s short-term debt, thus becoming an important step in implementing our strategy of extending the maturity of our debt portfolio. We also consider the loan granted at a relatively difficult time for the mining industry as additional proof of our partner’s trust in Mechel and the strategy we are realizing.”

Source - Mechel OAO

(www.steelguru.com)