MOSCOW (Reuters) - Russian steel and coal producer Mechel (MTLR.MM) has postponed completing a painful and lengthy debt restructuring process to 2019, the company said on Tuesday.
Mechel, at one point on the brink of bankruptcy, has been in restructuring talks with its lenders for several years.
On Tuesday the company said the share of its unrestructured debt portfolio was now down to 9 percent. It had planned to complete the process by the end of this year, but has now postponed this to 2019.
“We continue working on restructuring the remainder of our loans and expect to complete this process next year,” Mechel chief executive Oleg Korzhov said on Tuesday.
The company said its net debt, excluding fines and penalties on overdue amounts, stood at 464.2 billion roubles ($6.97 billion) as of Sept. 30.
Mechel, controlled by Russian businessman Igor Zyuzin, borrowed extensively during the commodities boom in the 2000s. Its lengthy restructuring following the 2008 financial crisis was exacerbated by Russia’s economic crisis in 2014.
Russia’s three largest state-controlled banks - Sberbank (SBER.MM), VTB (VTBR.MM) and Gazprombank - subsequently confirmed, in April 2017, a restructuring of $5.1 billion of Mechel’s more than $6 billion debt.
In July made significant progress in restructuring the remainder of its debt after obtaining a loan to refinance an earlier pre-export financing agreement worth $1 billion.
Mechel’s third-quarter financial results, published on Tuesday, were weaker than in the second quarter, the company said, due to planned repairs at steelmaking facilities and transport limitations due to railway car shortages.
This did not significantly impact revenues, Mechel said, as the price environment was strong. Revenues were down 3 percent to 79.97 billion roubles compared to the previous three months.
Operating costs did rise, however, bringing down earnings before interest, taxation, depreciation and amortization (EBITDA). Core earnings dropped 17 percent in the third quarter, compared to the second, to 19.21 billion roubles.
“Later this year and next year we still have several major repairs ahead of us, necessary for increasing production and further expansion of our product range,” Korzhov said in a statement.
Mechel shares outperformed the market on Tuesday, rising 1 percent on the day compared with an 0.65 increase in the benchmark stock market index MOEX .IMOEX.
Reporting by Polina Ivanova; Editing by Katya Golubkova, editing by Louise Heavens