Mechel OAO, one of the leading Russian mining and metals companies, announces that project company Elgaugol OOO, which is part of Mechel Group, and State Corporation "Bank for Development and Foreign Economic Affairs (Vnesheconombank)" signed agreements for the second and third credit lines of project financing for developing Elga Coal Complex's first phase, for 2.085 billion US dollars and 418.7 million US dollars respectively.
The second credit line, totaling 2.085 billion US dollars, will be used to finance construction of Elga Coal Complex's facilities until the complex's coal mining and processing capacity reaches 11.7 million tonnes of run-of-mine coal a year, as well as completion of works aimed at increasing the Ulak-Elga railway's capacity.
The third credit line totaling 418.7 million US dollars will be used to fund expenses on paying Vnesheconombank's interest and fees for the second credit line until Elga Coal Complex's first-phase facilities are launched, as well as to repay the 150-million-dollar bridge loan — the first credit line granted Elgaugol OOO in October 2013.
49% of Elgaugol OOO's shares, as well as the project company's movable and real property will be offered as security on these credit lines. Vnesheconombank will also acquire 0.01% of Elgaugol OOO's equity capital with following repurchase.
Vnesheconombank's (VEB) Supervisory Board approved the agreement granting Mechel OAO project financing totaling 2.5 billion US dollars in September 2013. The loan has a tenor of 13.5 years.
"We highly value our cooperation with Vnesheconombank, which lends support to our company in a fairly volatile period for the industry and the global financial market. Thanks to this loan we have fully resolved the issue of financing for the Elga project, which will be developed regardless of volatility in commodity markets," Mechel OAO's Chief Financial Officer Stanislav Ploschenko said.