Mechel PAO Preferred (MTL-)

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Mechel considers dismissing CEO after $2.2bn loss

Mechel is considering replacing its chief executive as the heavily leveraged Russian steel and coking coal producer continues to grapple with its debt burden.
The company’s board will discuss the resignation of Evgeny Mikhel at its meeting on Monday, according to a regulatory statement. An announcement is expected on Tuesday but a spokesman declined to comment further.

Mr Mikhel has been Mechel’s chief executive since July 2010, taking over from Igor Zyuzin, the company’s Russian billionaire owner, who returned to his earlier role of chairman. Before becoming chief executive Mr Mikhel had been Mr Zyuzin’s first deputy chief executive officer since 2009.
Lossmaking Mechel is one of several Russian miners struggling to pay down billions of dollars in pre-crisis debt.
In the heady days of early 2008, groups such as Mechel and Evraz, a Russian steelmaker, embarked on global buying sprees, purchasing assets as far away as the US and Canada.
Last week, Mechel reported a net loss of $2.2bn in the first nine months of 2013 because of a number of one-off writedowns. This was up from a net loss of $550m in the same period last year.
It is one of Russia’s most indebted mining companies, with more than $9bn of net debt. In recent months the company has focused on securing covenant holidays until the end of 2014 from its creditors, alleviating pressure on the coal miner. It has announced arrangements with Sberbank and a deal with a syndicate of foreign banks, including ING, Société Générale, UniCredit, Commerzbank, Raiffeisen and Russia’s VTB.
The company is also in talks to sell assets that are either lossmaking or not part of its core mining business.
Mechel has been struggling with depressed global prices for coal, which produced around 30 per cent of revenues but around fourth-fifths of earnings last year. Mechel is among the world’s half-dozen largest exporters of coking coal used in steelmaking.
At its results Mr Mikhel said: “This year, the company operated in the conditions of continuing weakness on our key markets, which to a large extent had an impact on its main financial results. Nevertheless, by strictly adhering to our planned course aimed at creating conditions for deleveraging, we managed to resolve the most critical issues.”
While Mechel is among the most indebted of Russian miners, it is not alone. Rusal, for instance, is contending with about $10bn in net debt, according to information released by the company in late September.
Mechel’s Moscow share price remained flat in Monday afternoon trading, down almost 1 per cent to Rbs64.9.

http://www.ft.com/intl/cms/s/0/0f161f4c-7155-11e3-adbd-00144feabdc0.html#axzz2p2ydF3vt