Bloomberg News

Mechel Said to Study Shifting IPO of Mining Unit to New York

December 28, 2011

(Updates with analyst comment in fourth paragraph.)

Dec. 19 (Bloomberg) -- OAO Mechel, Russia’s largest coking coal producer, may move an initial public offering of its coal and iron-ore mining unit to New York next year after delaying a planned $2 billion sale in London in September.

The deal may take place in April or May, three people with knowledge of the matter said, declining to be identified, because the information is confidential. No decision has yet been made, they said. Mechel’s press office declined to comment.

The IPO of OAO Mechel-Mining, as the unit is called, was the largest sale planned in Russia’s metals and mining industry this year. The plan was delayed in September because of Europe’s debt crisis and after global stock markets declined, people said at the time.

“New York offers higher trading volumes than London,” Dmitry Smolin, Uralsib Capital analyst said by phone from Moscow. “If that is the target, than it makes sense.”

Mechel may take advantage of the fact that U.S. investors already know the company, Smolin said. Mechel is the only Russian metals and mining producer listed on the New York Stock Exchange in a 2004 IPO.

The unit may become the first Russian company to sell shares in New York since the sale of Yandex NV, owners of Russia’s most popular search engine, raised $1.4 billion in May on the Nasdaq Stock Market.

Mechel shares rose as much as 1.8 percent today and traded up 1.4 percent at 286.20 rubles at 5:39 p.m. in Moscow. The shares have fallen 68 percent this year.

Mechel-Mining picked JPMorgan Chase & Co., Morgan Stanley and UBS AG to manage the London IPO. The company planned to sell 10 percent to 15 percent of its stock for $1.5 billion to $2 billion, people familiar with the process said in July.

--Editors: Torrey Clark, Alex Devine

To contact the reporters on this story: Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net; Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editor responsible for this story: Amanda Jordan at ajordan11@bloomberg.net


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