Russian state development corporation VEB.RF and mining giant Evraz may create a joint venture basing on coal producer Sibuglemet.
VEB.RF may contribute Sibuglemet to the joint venture to get a 25% stake, while Evraz may obtain a 75% stake after contributing coal producers Yuzhkuzbassugol, Raspadskaya, and Mezhegeiugol. According to a source familiar with a top manager of Evraz, the companies may close the deal in 2019.
One of the sources said that Sibuglemet’s debt amounted to $2.5 billion, of which debt to VEB.RF accounted for $2.3 billion.
Maxim Khudalov, director of the corporate ratings group at the Analytical Credit Rating Agency (ACRA), said that Sibuglemet’s value might amount to about $3 billion, and its debt would be most likely transferred to the joint venture. Evraz’ net debt stood at $3.9 billion as of the end of June, so its debt burden might stand at about 2.5x of earnings before interest, taxes, depreciation, and amortization (EBITDA) after creation of the joint venture, Khudalov said.
According to the materials of CDU-TEK, which provides data and analysis to Russia’s Energy Ministry, the joint venture may drive Evraz’ coking coal output to 28.5 million tons per year and its market share may rise to 33.8% from 26.5%.
BCS Global Markets’ Senior Analyst Oleg Petropavlovsky said that the venture might allow Evraz to cover its internal demand in coking coal completely and become Russia’s largest exporter of it. (Prime/Ukrainian metal)