10 Jun 2010 16:38

Book-runners exercise over-allotment option on Mechel preferred share offering

MOSCOW. June 10 (Interfax) - Mechel said an over-allotment option in a public offering by certain selling shareholders of preferred shares and preferred American Depositary Shares had now been closed.

The preferred shares and Preferred ADSs were offered by members of the Justice family in the United States, from which Mechel bought Bluestone Coal Co for $436 million cash and 83.3 million preferred shares in 2008.

"As a result of the exercise of the over-allotment option granted to the joint book-runners in the offering, the selling shareholders have sold an additional 2,974,400 Preferred ADSs (representing 1,487,200 preferred shares), resulting in the sale of an aggregate of 33,474,400 Preferred ADSs (representing 16,737,200 preferred shares) in the offering," Mechel said in a press release on June 10.

The Offering has been registered with the U.S. Securities and Exchange Commission (SEC) under an automatic shelf registration statement filed by Mechel. organ Stanley and Renaissance Securities (Cyprus) Limited have acted as Joint Global Coordinators and Joint Bookrunners for the Offering.

Mechel placed 15.25 million preferred shares at $15 a share and raised $228.75 million with the offering at the beginning of May. The book-runners had an over-allotment option to buy 2.25 million shares, exercisable within 30 days.

Mechel tried to place 55 million prefs back in the summer of 2008, at $50.5-$60.5 per share and ADS, at a premium to the market. But the company put the placement on hold after coming under criticism from Prime Minister Vladimir Putin at a meeting in Nizhny Novgorod that July and after the financial crisis hit in the fall of 2008.

Mechel later came to an agreement to buy Bluestone Coal Co from the Justice family for $436 million cash and 83.3 million preferred shares. The 55.5 million outstanding prefs remained on the balance sheet of Mechel subsidiary Skyblock Limited, and effectively became treasury shares. The agreement with the Justice family stated that the prefs would be sold publicly, market conditions permitting.

Mechel has consolidated controlling stakes in coal and steel companies and a number of ports. General Director Igor Zyuzin is Mechel's chief beneficiary. The free float is around 30%.