NEW YORK (TheStreet) -- Shares of Mechel OAO (MTL) hit a 52-week low of 94 cents on Monday after Russia's economy minister said bankruptcy was "a probable scenario" for the metals and mining group, according to the Wall Street Journal.
Mechel is facing pressure to repay its heavy debt rather than restructure. Alexei Ulyukayev's comments came after Mechel opposed a proposal by its three largest lenders, VTB, Sberbank and Gazprombank, to convert part of its debt into shares. VTB said it would take legal action to recover its debt in light of Mechel's opposition to the proposal.
The coking coal miner and steel manufacturer is in financial trouble because it took on heavy debt in order to fund major projects just as the price of coking coal, a crucial ingredient to make steel, dropped as supply rose.
The stock closed down 29.66% to $1.02. More than 4.7 million shares changed hands, compared to the average volume of 586,773.
Separately, TheStreet Ratings team rates MECHEL OAO as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate MECHEL OAO (MTL) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity, weak operating cash flow, poor profit margins and generally disappointing historical performance in the stock itself."