Mechel’s ore mining subsidiary, Mechel Mining, has approached Russia’s Federal Financial Markets Service (FFMS) for permission to list in London Stock Exchange (LSE), with analysts stating timing of the planned placement will be crucial.
Mechel Mining has asked the FFMS for clearance to sell almost 4.6 billion of its ordinary shares abroad, or almost 25% of the company’s share capital, with the Bank of New York Mellon (Luxembourg) having been chosen to issue depositary receipts. Interfax reports Morgan Stanley has estimated Mechel Mining at $15.6billion on a debt-free basis,.
However, Uralsib analyst, Dmitry Smolin, says the current volatility on global markets could hamper the placement, saying that the company is unlikely to get the valuation it is looking for, and arguing it would be better served to defer until later next year.
“The management would like to have Mechel Mining estimated at $15 billion (excluding the debt), but considering the current situation in the market, that’s impossible.”
Alternatively, Pavel Emelyantsev, Investcafe analyst, believes Mechel will need to place its shares before the year end, with the money attracted possibly to be used to pay its debt.