The FINANCIAL — According to RIA Novosti, Mechel, one of the leading Russian mining and metals companies, has applied to national development bank Vnesheconombank for a loan of almost $2 billion to refinance its foreign liabilities, business paper Vedomosti said on December 1.
Mechel needs the money mainly to refinance a loan obtained to acquire Oriel, a London-based chrome and nickel mining and processing company, the paper said, citing a source close to the company and an investment banker working with it.
A source close to VEB told Vedomosti that the company's loan application was examined last week by an interim loan committee of the national development bank and was given general approval.
However, negotiations on the loan terms are still ongoing, a source close to Mechel said.
Apart from Mechel, money to refinance loans obtained from Western banks will also be requested by Russia's largest steel pipe manufacturer TMK, and by steelmaking giant Severstal, which needs $325 million to redeem Eurobonds, Vedomosti reported.
In the Russian metals sector, Evraz Group, controlled by Russian billionaire Roman Abramovich, was the first to receive a $1.8 bln loan from VEB on November 27. After this announcement, the share prices of Russian metals companies surged on the London Stock Exchange, the paper said.
Evraz Group's shares went up 42.4% to $3.42 billion, TMK gained 67.27% to $1.01 billion, Severstal 13.36% to $316 billion, Novolipetsk Steel 28.05% to $6.29 billion and the Magnitogorsk Iron and Steel Works 36.78% to $2.85 billion on the LSE, the paper reported.