Russia’s Mechel to Dump US and Other Assets to Focus on Asia (MT)
Its not just Vladimir Putin who is looking east as the Moscow Times has reported that debt laden Russian coal mining giant Mechel OAO (NYSE: MTL) plans to sell its US-based coal mining subsidiary Bluestone as well as its Moskoks coke and gas plant in Moscow to help shed debts totaling $8.3 billion.
Mechel purchased Bluestone for $425 million in 2009. Bluestone operates three mining facilities in West Virginia producing coal for steel-makers in the U.S., Canada, Europe, Asia and South America.
Industry and Trade Minister Denis Manturov said last Thursday that the Russian government has no plans to declare the company bankrupt, and that a support plan will be finalized and presented to Prime Minister Dmitry Medvedev for consideration next week.
In fact and instead of bankruptcy or a scaling back of operations, the company is planning to significantly expand its deliveries of coal to important Asian economies such as China, Japan and South Korea. Mechel hopes to increase shipments to China by 19%, reaching a volume of 7.5 million tons annually while in Japan and South Korea, the company is planning to increase sales by over 40%, expanding export volumes to 1.85 million and 1 million tons respectively.
In mid June, Bloomberg had reported that anonymous sources were saying that Mechel was in talks with its three biggest creditors — OAO Gazprombank, Sberbank Rossii OAO (OTCMKTS:SBRCY) and VTB Bank OAO (MCX: VTBR) — along with government officials on issuing about 180 billion rubles ($5.2 billion) in Mechel shares or bonds convertible into its stock. VTB has since said it would not give Mechel any more money.
To read the whole article, Debt-Stricken Mechel Looks to Shed Assets and Expand Asian Presence, go to the website of the Moscow Times.
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