Naftogaz Ukraine to capitalize $12.7 mln, 94.6 mln euros in deferred bond payments

MOSCOW. July 15 (Interfax) - Naftogaz Ukraine has decided to exercise its right to capitalize deferred interest payments due on July 19 on two Eurobond issues maturing on July 19, 2025 and November 8, 2026 with issued face value of $335 million and 600 million euros, respectively.

As a result, the principal amount of the debt on these bond issues will increase by respectively $12.702 million and 94.638 million euros, Ukrainian media reported citing the issuer's, Kondor Finance plc filing on the Irish Stock Exchange. Accordingly, the total debt on these bonds has increased to respectively $330.952 million and 694.638 million euros.

All three of Naftogaz's outstanding Eurobond issues were placed in 2019. They include a three-year issue of $335 million placed at 7.375% in July that year, a five-year issue of 600 million euros placed at 7.125% in July and a seven-year issue of $500 million placed at 7.625% in November.

The Ukrainian state oil and gas company initially proposed to pay all coupons on the 2022 and 2024 bonds on July 19, 2024 and redeem the 2022 bonds the same day, and to pay the coupon on the 2026 bonds on November 8, 2024. However, bondholders rejected the offer, while the government prohibited payment, which led to the company defaulting on two of the three issues.

In September 2022, holders of Naftogaz bonds maturing in July 2024 agreed to defer payment for two years. As a result, the company said it would be able to pay the principal debt of 600 million euros in 2026 rather than 2024, and start paying interest on it in 2024. The amount of interest deferred in 2022-2024 is 90 million euros (45 million euros per year).

In the summer of 2023, Naftogaz announced it had secured investors' consent to defer its Eurobonds maturing in July 2022 and November 2026 to 2024 and 2028, respectively.

However, Naftogaz retained the right to repay or capitalize overdue interest fully or in part, with the exception of the last coupon, which it plans to pay in cash.

Naftogaz completed restructuring debt on all the Eurobond issues in September 2023 and made all the agreed payments to bondholders.

The company reported that as of April 2024 it had accumulated $38.1 million in a special account to secure payment of interest on the 2028 Eurobonds totalling $500 million.