OAO Mechel (MTL:US), Russia’s largest coking coal producer, won a tender for 55 percent of OAO Vanino Commercial Sea Port (MTPV) on the Pacific coast, outbidding investor Oleg Deripaska’s En+ Group.
Mechel (MTLR) offered 15.5 billion rubles ($500 million) for the government’s stake, beating six competitors, VTB Capital, the sale organizer, said today in a statement. The winning bid was 10 times higher than the minimum price, the bank said.
With $8.8 billion of net debt at the end of June, Mechel is one of the most indebted Russian mining companies. This week Mechel completed a $1 billion restructuring, agreeing on a 12- month grace period during which it doesn’t have to pay down the loan. The coal producer is seeking to sell assets for funds to pay debt and finance projects in eastern Russia, which may benefit from access to the port.
“We congratulate the winner and will wait for the mandatory offer to buyout minority shareholders as required by the law,” Elena Rollins, a spokeswoman for En+, said by phone. Deripaska’s company bid 10.6 billion rubles, she said.
Mechel may need to spend $300 million to buy out minorities, BCS Financial Group said. The company doesn’t plan to comment before the government approves the tender results, said Pavel Taran, a Mechel spokesman.
“The price is very high for Mechel,” George Buzhenitsa, an analyst at Deutsche Bank AG in Moscow said by phone. “On the other hand, without Vanino, Mechel would need to build a new port to ship coal form Far East as Elga coal deposit develops.”
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