OAO Mechel (MTL:US)’s renegotiated covenants on its $2 billion syndicated loan, reported by DebtWire, are “very positive” for Russia’s largest producer of coal for steelmakers, UralSib Capital said.
The news “was a long-awaited event for the market,” analyst Dmitry Smolin said in a note today. “With new debt covenants Mechel (MTLR) is unlikely to have any difficulties with financial discipline over the next 2-3 years.”
Two thirds of lenders allowed Mechel to adjust its covenant of net debt to earnings before interest, taxes, depreciation and amortization from 3.5 currently to 5.5 for 2012, 4.4 for 2013, and 3.75 for 2014, Smolin cited DebtWire as reporting yesterday. Mechel will pay a 75 basis point fee to lenders for the waiver, according to the report.
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