April 28, 2015, 14:10 / Business

Mechel suffered a $4.3 billion loss in 2014

The company's revenue amounted to $6.4 billion Vitaly Petlevoy

Mechel is one of the most heavily indebted mining and metallurgical companies in Russia / Andrey Rudakov

Mechel, one of the most heavily indebted mining and metallurgical companies in Russia, reported for 2014. Over the past year, the company received $6.4 billion in revenue according to US GAAP, $709 million in EBITDA, and a net loss of $4.3 billion, the company said in a statement .

The mining and metallurgical company notes that the loss is paper, $1.5 billion was due to impairment due to the sale of assets, and $2.4 billion was due to exchange rate differences. Due to the sale of assets and the devaluation of the national currency, the company's revenue decreased by 25%, the report notes. At the same time, Mechel's net debt decreased significantly - to $6.7 billion (more than 50% of the debt is denominated in rubles).

“At the end of 2014, the macroeconomic environment changed dramatically. The devaluation of the ruble led to a reduction in the debt burden in dollar terms by 23%,” Mechel CEO Oleg Korzhov is quoted as saying in the company’s message.

Almost all of Mechel's debt is short-term. “In 2014, the company began negotiations with creditors on debt restructuring. An agreement has not yet been reached with them,” the statement said.

Meanwhile, the devaluation of the ruble and the asset portfolio optimization program had a positive impact on the company: EBITDA margin increased from 8.6% in 2013 to 11.1% in 2014, reaching the best indicator in the last 2 years in the fourth quarter of 2014. 5 years - 15.9%. At the end of the year, Mechel showed an operating profit of $126 million against an operating loss of $657 million in 2013, the company said. The company's interest payments increased in 2014 by 7%, to $793 million, which is $84 million more than the company's EBITDA. However, Mechel pays creditors irregularly.

The court recovered 50.2 billion rubles from Mechel in favor of VTB

Business/Industry

In early April, the Moscow Arbitration Court satisfied VTB's claim for the recovery of 50.2 billion rubles. from Mechel. RUB 43.8 billion of this is the main body of the debt, the rest is fines and penalties, as well as overdue interest debt to the bank. In early March, VTB had the opportunity by law to file a lawsuit against Mechel's bankruptcy, but did not do so because the company entered into negotiations on debt refinancing.

On March 17, a meeting took place between the owner of 51.2% of Mechel, Igor Zyuzin, and VTB President Andrei Kostin. They agreed that the company would pay the bank overdue interest payments on the loan, as well as fines and penalties amounting to 4.5 billion rubles, three Vedomosti sources said. At the same time, only one tranche followed, which did not completely cover the amount of the entire interest debt (4.5 billion rubles). Yesterday, VTB filed another lawsuit to recover another 2.67 billion rubles. overdue interest payments, of which RUB 2.544 billion. - this is the debt itself, and the rest is penalties.

Negotiations continue with Sberbank, on behalf of Mechel they are being conducted by the Rothschild Group, which the bank itself invited to the negotiations. One of the latest proposals was the conversion of Mechel's debt into shares of Mechel's subsidiaries, but the bank was not satisfied with it. “We are not just ready [to sue Mechel for non-payment of debt after the payment period has expired], we will do this, if options acceptable for restructuring are not offered, we will go to bankruptcy,” said Sberbank President German Gref.