DTEK Renewables proposes to defer redemption of 2024 Eurobonds by three years

MOSCOW. July 2 (Interfax) - DTEK Renewables B.V., the renewable power division of Ukrainian energy group DTEK, is asking holders of its outstanding 8.5% Eurobonds maturing in 2024, which total 325 million euros, to defer redemption by three years.

The terms proposed to bondholders are laid out in a consent solicitation memorandum dated July 1, Ukrainian media reported, citing an announcement by the issuer of the bonds, DTEK Renewables Finance B.V. on the Irish Stock Exchange.

The company proposed to extend the duration of the bonds until November 12, 2027.

It also proposed to introduce an option for the issuer to elect to pay interest in the form of cash and/or payment-in-kind (PIK) on not more than two occasions for so long as applicable currency control regulations imposed by the National Bank of Ukraine (NBU) continue to restrict the group's ability to pay interest on the bonds, and to reduce the minimum denomination of the bonds to 1 euro in order to facilitate the payment of PIK interest.

DTEK Renewables Finance proposed to appoint GLAS Trust Corporate as security agent for the bonds, and to add the following new security under the bonds within 30 days of the execution and entry into force of the amended trust deed: a first ranking Ukrainian law governed pledge over all of the issuer's equity interests in DTEK Pokrovska Solar Farm LLC and DTEK Tryfonivska Solar Farm LLC in favor of the security agent acting as pledgee, as well as an English law governed assignment of all of the issuer's rights and interests in and under the receivables in favor of the trustee (for itself and for the secured parties).

At the same time, the company proposed that the following existing security and suretyship under the bonds be terminated: the fixed charge over the interest reserve account and the account bank agreement; and the Tiligulska wind farm suretyship.

The company recalled that Ukraine is under martial law due to the conflict in the country and the NBU has imposed a moratorium on cross-border payments, and that Ukraine's Chamber of Commerce and Industry confirmed on February 28, 2022 that the ongoing hostilities had resulted in the occurrence of a force majeure situation.

"As a result, the Group has experienced a number of significant challenges and disruptions which have had, and continue to have, a material impact on its business, operations and financial performance, including, but not limited to: the Group's electricity production decreased from 2.1 TWh in 2021, to 0.9 TWh in 2022, before increasing slightly to 1.0 TWh in 2023; [and] the Group's revenue and profit decreased from 239.7 million euros and 137.6 million euros, respectively, for the year ended December 31, 2021, to 86.7 million euros and a net loss of 466.0 million euros, respectively, for the year ended December 31, 2022, increasing slightly to revenue of 94.2 million euros and a net loss of 13.8 million euros, respectively, for the year ended December 31, 2023," the company said.

Furthermore, the group's assets shrank from 1.46 billion euros as of December 31, 2021 to 676 million euros as of December 31, 2022 and to 604 million euros as of December 31, 2023, and some of its wind farms with capacity of about 500 MW, or about 47% of the group's total installed capacity, are located in territory not controlled by the Ukrainian government, the company said.