Mechel posted a fourth-quarter loss and breached covenants on $4.2 billion of loans after steel prices fell and it lost customers for coking coal, it said in a statement Wednesday.

The net loss was $496.9 million, after net income of $207 million a year earlier. Sales fell 33 percent to $1.37 billion.

"Most lenders have been understanding," chief executive Igor Zyuzin said on a conference call. The company reclassified $1.6 billion of long-term loans as due in the next 12 months because of the breach of covenants, which typically set conditions such as maximum debt levels on lenders. The majority of the debt will be refinanced next month, Zyuzin said.

Prices for products such as steel bars used in housing fell more than 60 percent in the fourth quarter as the global credit crunch cut Russian construction companies' access to funds and hurt mortgage lending.

The company said coal production in the quarter fell 15 percent to 5.69 million metric tons from the previous three months, with coking coal declining 31 percent.

It will produce 7.4 million tons of coal at its Yakutugol unit and 11.4 million tons at Southern Kuzbass this year, senior vice president Vladimir Polin said on the conference call.