January 21, 2020 - Russian steel and coal producer Mechel has decided not to buy back a stake in its biggest asset, the Elga coal mine in Russia’s far east, its creditor Gazprombank, which has held the stake since 2016, said on Tuesday.

Mechel is engaged in talks with its creditors about restructuring $6 billion in loans.

It sold a 49% stake in its Elga project, one of the world’s largest coking coal deposits with reserves of 2.2 billion tonnes, to Gazprombank in 2016 as part of a debt restructuring process.

The metals producer, controlled by businessman Igor Zyuzin, was granted a pre-emptive right by the bank to buy a 34% stake back before a deadline that expired on Monday.

This was valued at about 30 billion roubles ($487 million) at the time, sources said.

Gazprombank said on Tuesday that Mechel had failed to exercise this pre-emptive right in time, adding the bank would consider options for further action.

This could include a sale of the stake to an external buyer. Last year, the bank received a surprise offer for its Elga holdings from investor Albert Avdolyan and his A-Property group. A-Property declined to comment.

A Mechel representative said on Tuesday it had received an alternative offer regarding the Elga coal project, which is why it chose not buy Gazprombank’s stake.

It said more time was needed to study the new offer, but provided no further details.

Mechel’s other main creditor is VTB.