Mechel of Russia has announced Tuesday that it would be launching a share buy back programme amounting to about US$100 million. This comes after it had reported a net loss in the first quarter of about US$321 million attributed to weak prices.
The Russia based miner listed in the New York Stock Exchange had seen its shares decline by as much as 90% since 2011 as prices for steel and coal have tumbled and there is no sign of a respite. Their current financial situation has raised many concerns on how the mining company would be able to manage its debts currently amounting to US$9 billion.
According to Mechel's CFO Stanislave Ploschenko, in a statement, "The buyback decision reflects the Board's confidence that the fundamental value of our company's shares is higher and meets the interests of all of its shareholders."
As a result of the announcement of the share buy back plan, share prices of the miner jumped to its highest level in the last nine months. The shares increased by more than 7% as word of the US$100 million share buy back programme became public.
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