Evraz Secures $610 Million Loan Amid Volatile Market Conditions

Russian steelmaker Evraz PLC (EVR.LN) said Wednesday it secured a $610 million five-year revolving credit facility to refinance its debt and meet other corporate needs, amid the volatile credit and commodities markets.

Evraz, which is set to repay less than $250 million in debt next year, is not expected to have any problems with its lenders, UralSib analyst Dmitry Smolin said. The steelmaker had a comfortable 2.1 ratio of its net debt to the last 12-months earnings before interest, tax, depreciation and amortization, or Ebitda, as of June 30, with net debt of $6.04 billion.

However, as metal prices continue softening, some highly-leveraged Russian companies may start facing difficulties soon.

"Russian metal companies have never fully recovered from the previous financial crisis--their debt has been refinanced but hasn't been paid out, while the metal prices have never reached the pre-crisis levels," Smolin said. "And now, that the prices are falling, some have found themselves in a difficult situation."

Aluminum maker United Co. Rusal (0486.HK), whose debt stands at $11.4 billion, said on Dec.15 it has started to negotiate "a more flexible approach to the calculation of covenants" with its lenders due to the "possible continuing weakness of global commodity markets over the next 12 months." LME three-month aluminum has fallen by 19% since Sept. 1 and was trading at $2,005 at 1404GMT Wednesday.

Coal and steel group OAO Mechel (MTL), whose total debt stood at $9.5 billion as of Sep.30 warned on Dec.15 it may break its debt covenant at the end of the year, as coal and steel prices continue to soften.

-By Nadia Popova, Dow Jones Newswires, [phone];

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(Rhiannon Hoyle in London contributed to this report.)