Economy Minister Alexei Ulyukayev told Reuters that the government was considering a scheme that would involve a $5.2 billion (180 billion roubles) convertible bond that would subsequently be purchased by state development bank Vnesheconombank (VEB). Mechel would, in turn, utilize the proceeds to tackle part of its debt load.

The company is currently $8.6 million in debt, and in the past has endured several debt restructurings with creditor banks.

A rescue deal, however, may reduce the stake of its controlling shareholder, businessman Igor Zyuzin. If this scheme moves forward, it could be the first corporate restructuring involving the dilution of a controlling shareholder’s stake is diluted; Zyuzin currently owns 67.4% of Mechel.

“The main thing being discussed is a bridge loan and then the transfer of rights to demand collateral to VEB. It is possible that these rights will come through…convertible bonds,” Ulyukayev told Reuters.

He did not disclose the amount of the possible bridge loan, but sources familiar with the issue said that three state banks, including Sberbank, VTB and Gazprombank, may combine to provide Mechel with a $1 billion (35 billion roubles) bridge loan before it issues the bonds.

Mechel has so far not commented on the potential deal, and none of the banks have issued statements.

The situation has already been discussed with First Deputy Prime Minister Igor Shuvalov, and this week plans to talk it over with Prime Minister Dmitry Medvedev, unidentified sources told Reuters.

A decision could be made in two to three weeks.