Severstal decides against buying Raspadskaya coal stake -sources
MOSCOW. June 3 (Interfax) - Severstal has decided against buying 80% of the shares in coking coal producer Raspadskaya , financial market sources told Interfax.
Severstal declined to comment.
Reports said in the middle or May that Severstal as well as Mechel were interested in Raspadskaya.
The Cyprus-registered Corber Enterprises owns 80% of Raspadskaya. Evraz Group, on the one hand, and Gennady Kozovoi, Raspadskaya's CEO, and Alexander Vagin, the company's board chairman, on the other, are the beneficiaries of Corber Enterprises on equal terms. Raspadskaya's free float is around 20%.
Evraz Group and the management of Raspadskaya have hired Deutsche Bank and Morgan Stanley to find buyers for 80% of Raspadskaya.
Unofficial reports have said SDS-Coal and Mechel want to buy Raspadskaya, but are demanding a substantial discount because of the state of the mine after last year's deadly and destructive methane explosions. Foreign companies like ENRC, ArcelorMittal and Metinvest are not interested in Raspadskaya, a source familiar with the negotiating process told Interfax.
A banking sector source said the owners want to sell the 80% for $6 billion, which would be more than the $5.2 billion the whole company is worth at market prices. Mechel is only prepared to pay around $2 billion.
Sources say Raspadskaya's management wants a cash-only deal, but that Evraz was prepared to discuss various options, including an asset swap.
Uralsib analyst Dmitry Smolin said Mechel was probably the only real contender left to buy the asset as it had experience in restoring coal mines, however the price Mechel is willing to pay might be a stumbling block at talks.
A series or methane blasts in May 2010 killed 91 people at the Raspadskaya deep mine and put it out of action until December. Restoration costs are an estimated $280 million