Bloomberg News

Belon Seeks Sberbank Loan and Refinancing of Debt

March 26, 2009

OAO Belon, the Russian coal producer part-owned by OAO Magnitogorsk Iron & Steel, and OAO Sberbank are discussing a five-year loan for a new project, first deputy Chief Executive Officer Konstantin Lagutin said.

Belon also is “hopeful” of refinancing short-term debt, Lagutin said today at a meeting of industry executives and government officials in Moscow. It’s among companies seeking state aid in securing long-term reorganization of debt, he said.

“To keep the plants working and people in jobs, we’re using the last of our resources,” Lagutin said.

Russian coal producers say the industry may collapse without government help after prices plummeted and high transportation costs made exports unprofitable. OAO Raspadskaya, the second-biggest supplier of coal to steel companies, has cut wages by 40 percent and shortened the working week to four days, according to the Russian Chamber of Commerce and Industry.

Alexander Andreev, Raspadskaya’s deputy CEO, declined to comment when telephoned today by Bloomberg.

Belon has “little room” to reduce expenses because transportation accounts for 75 percent of total costs, Lagutin said. The mining company is operating at 70 percent of its capacity, he said.

Sberbank is the biggest Russian lender. The meeting was organized by the chamber of commerce.

To contact the reporters on this story: Maria Kolesnikova in Moscow at mkolesnikova@bloomberg.net; Yuriy Humber in Moscow at yhumber@bloomberg.net.

To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net.


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