Why Mechel OAO's Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Russian steel maker Mechel OAO  jumped as much as 10.7% today after getting a potential lifeline from debt holders.

So what: The grace period and maturity of a $1 billion syndicated loan has been extended to 2014 and 2016 respectively. The company is having trouble paying back debt and was granted a waiver on another $1 billion loan on November 25, giving the company some breathing room.  

Now what: This extends Mechel's life a little longer but if the commodity market doesn't improve it won't matter. This doesn't fundamentally improve the company; it really just pushes bankruptcy off for a while. That's why I don't see this as a buy sign and would wait for a strong improvement in operations before jumping in.

Our top stock of 2014
If you're looking for a high quality stock to buy now, The Motley Fool's chief investment officer has just hand-picked one such opportunity in our new report: "The Motley Fool's Top Stock for 2014." To find out which stock it is and read our in-depth report, simply click here. It's free!

The article Why Mechel OAO's Shares Popped originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story