Mechel PAO (MTL)

Major Milestone just hit today! First time in the history of the stock, at least as far as I know, that the Pref. has passed the Common on the Russian exchange. As I've been preaching for the last five years (to the criticism of many), the Pref. should be selling at a premium to the Common since it will likely receive dividends for several years before the Common starts paying dividends AND, most importantly, the dividend on the preferred cannot be less than the dividend on the Common. Go back in the history of dividends and the pref has always paid more (most times many multiples) than the common dividend. Anyway, to the few preferred believers out there, mark today on your calendar as a historical event!

An interesting happening surrounding Mechel's debt. I hope VTB is doing this to make it easier to work with Mechel.

VTB has collected half of the debts of Mechel

VTB became the main creditor of Mechel - almost 50 billion rubles passed the debt from Sberbank to it. The transaction, according to RBC, was held in an exchange format: Sberbank, among other things, received debts of Eurocement Group Filaret Galchev to VTB

Подробнее на РБК:
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Mechel may buy part of stake in Elgin coal field from Gazprombank
The company notified the bank of its desire to acquire 34% of Russia's largest coking coal deposit

Mechel accepted Gazprombank's mandatory offer to buy back a stake in the Elgin coal project, a representative of the bank told Vedomosti. According to him,Mechel agreed to buy 34% of Gazprombank's 49% of the project. We are talking about shares in three LLCs: Elga Road, Mechel Trans East and Elgaugol. A representative of Gazprombank did not provide any other comments.

Mechel now has 51% of Elga Road,Mechel Trans East and Elgaugol. The representative of Gazprombank does not say what the fate of the remaining 15% will be.

A Mechel spokesman confirmed the offer.

The Elgin coal mine is located in Yakutia. It is Russia's largest coking coal field with reserves of 2.2 billion tons.

The cost of the packages in the project for the buy-back of the three Mechel AND Gazprombank LLC was agreed in advance, when in 2016 Gazprombank bought 49% of the Elgin field. Then the parties agreed that Gazprombank three years after the acquisition has the right to sell shares in Elgin companies, and Mechel has the preferential right to buy them. But the value of these shares will be determined based on the central bank's rate and the bank's rates. Now the value of 49% of the package is 46.5 billion rubles. Thus, the purchase of 34% by Mechel in the companies of the Elgin Cluster could bring Gazprombank 32.3 billion rubles, or only 1.9 billion rubles. less than the bank paid for a 49% stake when it bought it in 2016.

It is not known how Mechel can buy shares in the Elgin project. The company itself does not have such money. At the end of June, Mechel's accounts had 2.8 billion rubles.

In August, A-Properties, one of the founders of Yota telecommunications operator Albert Avdolyan, filed a petition with the Federal Antitrust Service (FAS) to acquire 49% of Gazprombank's Elgin field.

MTL askiing its debtholders for four more years...

@@@MOSCOW, July 24 (Reuters) - Russian coal and steel producer Mechel has asked banks to push back its debt repayments to 2024-2026 from 2020-2024, Interfax news agency cited an executive at Russian state lender Sberbank as saying on Wednesday. Mechel, once on the brink of bankruptcy, has been in restructuring talks with its lenders for several years. Its debt to Russia's three largest state-controlled banks - Sberbank, VTB and Gazprombank - stands at 347.5 billion roubles ($5.5 billion). Mechel submitted a new restructuring proposal to the banks in June, chief financial officer Nelli Galeeva was cited by Interfax as saying at the time, adding that the company hoped an agreement could be reached before the end of the year. Sberbank is considering Mechel's request, the lender's deputy board chairman Anatoly Popov was quoted as saying by Interfax on Wednesday. Mechel declined to comment. VTB said Mechel was repaying its debts on schedule and its proposal would be considered in due course, Interfax cited the lender as saying.

Gazprombank said it had not yet received an official request from Mechel, Interfax reported.

https://finance.yahoo.com/news/1-russias-mechel-seeks-postpone-145317744.html

Looking good for the preferred shares in 2020!!! By my rough calculations, the Pref. ADR's should get a dividend of approx. $0.15 per share based on the $12.6 billion ruble net income. However, hidden away in the numbers is a 25.8 billion ruble Foreign exchange loss (calculated at 12/31/18 when the Ruble was at almost it's lowest point). If you back out the FX loss, the net income would have come in at over 38 billion Rubles, indicating a dividend on the Pref. ADR's of over $0.45 per share. Assuming 2019 earnings are on par with 2018 and assuming zero FX adjustment, the Pref. ADR's could easily pop to $4 or more by this time next year (assuming it trades at 10x the forecast dividend). Not bad for those willing to hold.

Again we wait...

What we know: Mechel did not exercise the right to buy back GPBs stake in Elga. They received an offer that they need more time to consider. Kostin stated that restructuring is going as expected and when it is completed, Mechel will have a more long term deal that VTB believes they can service normally.

What we don't know: What the offer is. To buy Elga from them? A strategic investor whereby they can keep Elga?

great news for Mechel BEIJING (Reuters) - Chinese coal traders are halting purchases of Australian coal and coking coal as clearing times through China's customs have at least doubled to 40 days or more, four traders at major buyers told Reuters on Monday.

The traders said only cargoes from Australia, the biggest supplier of the fuel to the world's top consumer, were affected.

"We have stopped ordering coal from Australia because it is unknown how long the restriction will last," said a manager at a Shanghai-based trading company who usually buys around 400,000 tonnes of Australian coal every month.

Customs clearance typically takes five to 20 days. Now it can be as much as 45 days, said the manager, asking not to be identified as he was not authorised to speak to the media.

It was not clear why China had stepped up checks on Australian imports but tension between Beijing and Canberra has grown in recent months over issues of cyber security and China's influence in Pacific island nations.

China's General Administration of Customs did not respond to a request for comment. There was no immediate response from the Foreign Ministry to a faxed request for comment.

Authorities at some ports notified importers verbally this month that Australian thermal coal and coking coal would take longer than usual to clear, the Shanghai-based manager said.

A Beijing-based coal trader and a purchasing manager at a coke plant received similar notifications. None of the buyers were aware of the reason.

China has curbed coal imports in the past to support domestic coal miners and reduce consumption to tackle air pollution. It restricted Indonesian coal imports in 2017, citing high impurities and low energy efficiency.

The Beijing trader said the restrictions on Australian imports were "the first time for Beijing to curb coal imports from a specific country but without a reason."

Reuters reported in January that dozens of ships carrying coal and iron ore were waiting to unload outside ports due to possible customs delays.

The most-active thermal coal futures on China's Zhengzhou Commodity Exchange hit 594 yuan ($87.79) a tonne on Monday, just shy of the three-month peak of 595.6 yuan, although the contract closed down 1 percent 583.8 yuan a tonne.

Benchmark Newcastle high energy thermal coal prices have dropped to $88 a tonne, the lowest level in 19 months, consultancy Wood Mackenzie said.

The Shanghai trader said he had stopped buying from Australia and would purchase more from Indonesia and Russia.

The Beijing trader said she would reduce Australian imports.

A coal broker at state-backed mining group Minmetals said he had asked clients to put Australian imports on hold.

Refinitiv ship tracking data showed coal shipments departing from Australia's Newcastle port to China fell 30 percent last month compared with December to 18.19 million tonnes.

As of Monday, shipments scheduled to leave in February were 12.78 million tonnes.

($1 = 6.7663 Chinese yuan renminbi)

(Reporting by Muyu Xu, Meng Meng and Dominique Patton; Editing by Edmund Blair)

Next year's Pref. Dividend looking very good. For the first 9 months 2019, MTL's net income was about equal to full year 2018 earnings which produced a Pref. ADR dividend of approx. 14 cents. Looks like MTL will have a large FX gain for Q4 with the recent run-up in the Ruble/Dollar exchange rate. I was expecting the 2020 dividend to be around 14 cents but now think we could see in excess of 20 cents, or a return of almost 30% on today's current price of $0.67. Of course we won't know the final numbers until mid March but the large appreciation in the Ruble will almost assure a higher dividend than we received last year.

Hopefully this leads to some help developing Elga. They have the 2 necessary requirements, good coking coal and a railway.

An agreement on cooperation in the field of coking coal production in the Far Eastern Federal District was signed between the Far East Investment Promotion and Export Support Agency and the Indian company Coal India Limited. The document was signed in the presence of Russian President Vladimir Putin and Indian Prime Minister Narendra Modi on the sidelines of the Fifth Eastern Economic Forum.

As the Director General of the Agency Leonid Petukhov noted, “the signing was a logical step in working with Indian investors.” He recalled that since the beginning of the year a series of road shows and presentations have been held that reveal the possibilities of investing in projects in the Far East. In June, events were held in Mumbai as part of the WEF exit session, where issues of developing partnerships in a number of sectors were discussed. A massive visit of Indian business delegations took place in Vladivostok a few weeks ago. Among the events was the industry session “Coal and Non-Ferrous Metals in the Russian Far East: Opportunities for Growth”. Indian companies were provided with information on current and promising projects. “Based on its results, our Agency organized meetings of Coal India Limited with the management of Dolguchan, Colmar, Mechel.

According to him, the company expresses its readiness to consider the possibility of participating in coal projects in the Russian Far East. The key factor at this stage is the quality characteristics of coal, as well as the presence of a logistics component.

Coal India Limited is an Indian state-owned mining company founded in November 1975. Today it is the largest coal mining company in the world. Koal India operates in 82 mining regions of the Republic of India, has 7 subsidiaries engaged in coal mining, and owns a mining consulting company.