Mechel signed an agreement on offering Gazprombank the option to purchase 49% share in the Elga coking coal deposit development project for RUB 34.3 billion (USD 500 million).
According to the agreement, Mechel is due to sell to Gazprombank by June 30, 2016, 49% of shares in Elgaugol OOO, the project operator company and owner of its subsoil license, 49% of shares in Elga-Doroga OOO which owns the Ulak-Elga railway, and 49% of shares in Mecheltrans-East OOO which is the rail’s transport operator.
The agreement also stipulates coordinated efforts and mutual guarantees of the two sides regarding the project’s development. Gazprombank has the option of selling the share in Elga project to Mechel within three years following a five-year tenure.
The cash acquired through this deal will be used to repay Mechel’s debt to Sberbank and Sberbank Leasing.
The 321 km Ulak-Elga line provides railway access to the Elga coking coal deposit.
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