The Russian mining and steel producer Evraz Group has announced that as of June 30, 2009, its total debts amounted to approximately $8.49 billion, including about $3.79 billion of short-term debt and current portion of long-term debt, while its cash and cash equivalents amounted to approximately $665 million, with an additional $1.08 billion available under undrawn credit facilities.
On June 1, 2009, the supervisory board of Russian state-owned bank VEB approved the potential extension of maturity of the $1.8 billion loan facilities granted to Evraz in the fourth quarter of 2008 from one year to two years. In addition, Evraz also received a term sheet from VTB Bank confirming ongoing negotiations to extend a Ruble 10 billion (approx. $321 million) loan due in October 2009 for another four years. Thus, giving effect to the anticipated extension of the VEB and VTB facilities, as well as repayments of two tranches of the Deutsche Bank syndicated loan, Evraz's "short-term debt and current portion of long-term debt as of June 30, 2009 would decline to approximately $1.66 billion," states the company in its press release.
In addition, the company says that it is currently in compliance with all terms and conditions under its outstanding bonds and credit facilities. "However, based on the current economic environment and Evraz's outlook, when Evraz's consolidated financial statements for the year ended December 31, 2009 are published, Evraz may not be in compliance with financial covenants in certain of its debt instruments, which, if not resolved, could also constitute a cross default under its other debt instruments," reads the company's release, adding that "such an event would permit Evraz's lenders to demand immediate payment of the outstanding borrowings under the relevant debt instruments." Accordingly, Evraz is currently considering a number of alternatives "to proactively address this situation," including a waiver from its lenders, and "may incur additional costs related to these alternatives."
Moreover, it is reported that Evraz intends to raise $900 million in a combination of $600 million convertible bonds due in 2014 and of a $300 million share sale, to refinance its debt and fund corporate activities. The bonds will eventually be converted into GDRs (global depository receipts). Meanwhile, Lanebrook, which holds 77.6 percent of Evraz's stock, says it intends to buy out bonds and GDRs for the company's new shares worth $400 million.