The Moscow Arbitration Court has ruled for the recovery of $244mn in favour of Gazprombank of Russian gas giant Gazprom from the mining and metals holding Mechel and Chelyabinsk Metallurgical Plant (Chelyabinsk Metallurgical Plant), TASS and RBC business portal reported.

As followed by bne IntelliNews, last week the state-controlled “bad assets” bank Trust (Trast) said it could file a bankruptcy suit against the Russian Standard holding of Rustam Tariko. Tariko has been dragging out the matter with several failed debt restructuring deals after it defaulted on the $545mn worth of bonds in November 2017.

The reports could signal a new trend, where Russia’s state banks’ tolerance for chronic long-term debtors could be over.

According to the court decision, Chelyabinsk Metallurgical Plant is recognised as being obliged to Gazprombank under the financial participation agreement and the loan agreement (both dated 15 September, 2010); Mechel is also recognised as being obliged to Gazprombank. The amount to be repaid by ChMK and Mechel is $155mn of loan proceeds and another $90mn of interest on the loan.

The reason for the lawsuits was a loan agreement concluded in 2010 between Mechel and the French bank BNP Paribas. The borrowed funds were used for the construction of a universal rolling mill at the Chelyabinsk Metallurgical Plant. 

According to the plaintiff's version, Gazprombank provided financing to the French bank, and the latter, in turn, lent to Chelyabinsk Metallurgical Plant. A total of 30 tranches worth $182mn were issued from 2010 to 2013. According to the plaintiff's version, Mechel was supposed to repay the loan to Gazprombank through BNP Paribas from 2013 to 2019, but did not do so.

Gazprombank is Mechel's largest creditor along with state-controlled VTB Bank. In 2014 Mechel was on the verge of bankruptcy but its head, Igor Zyuzin, narrowly avoided a state bail-out and reached a $5bn debt restructuring agreement with Russia's largest banks: Sberbank, VTB and Gazprombank. At the end of 2019 Sberbank sold its debt in the miner to VTB Bank.

In 2020 Mechel was forced to give up Elga, its major mining asset, selling its 51% stake in the coal mine for RUB89bn ($1.16bn) to A-Property that went on to become one of the main players in the consolidating coal market. 

Since 2020 Mechel has started deleveraging, with cash received from the sale of assets and lower debt due to the effect of discontinued operations related to the disposal of companies from the Elga mining complex.

©2023 bne IntelliNews , source Magazine