The proposed plan could be merging certain Mechel’s assets with metal producer Evraz and state-owned Vnesheconombank (VEB), reported Bloomberg citing sources familiar with the matter.
It is an alternative to the possible convertible bonds sale, the sources told.
The merged entity would comprise Mechel assets, excluding Elga coal deposit and international units, Evraz’s assets and VEB’s Amurmetall steel facility.
The group of Russian and foreign investors may hold a 50% stake in the new company, Russian news agency Kommersant reported earlier.
Mechel would receive a 20% stake and $7.5bn in cash to pay down its debt, while Evraz may raise $2.5bn through this transaction, the news paper said.
Mechel has been suffering from declining prices for coking coal due to weakening demand from steelmakers as a result of slower economic growth.
In 2009, the government considered plans to merge seven mining companies affected by huge debts, including Evraz and Mechel; however, the plans collapsed as the company did not agree with the terms.
