As reported in the business daily Kommersant on 16 October 2012, Sberbank has opened four lines of credit for five years for mining and metals holding Mechel for RUB 24 billion (equivalent to USD 700 million).
Mechel Senior Vice-President for Finance Stanislav Ploschenko indicates that Mechel will use the credit to refinance its short-term debts. The company has been hit by falling iron ore and coking coal prices as global demand declines. It is also crippled by high leverage. At the end of June Mechel had total debts of USD 8.8 billion, including USD 1.2 billion due in the fourth quarter and USD 2.7 billion in 2013.
Despite the credits, however, Mechel could still default on all debt payments and so may have to request leeway from creators. It may also have to speed up plans to sell assets.
In mid-August 2012 Moody’s Investors Service downgraded Mechel’s corporate family rating and probability of default rating to B2 from B1.