Ukrenergo declares technical default on Eurobond payments
MOSCOW. Nov 6 (Interfax) - Ukrenergo is temporarily suspending payments on green and sustainability-linked bonds from November 9, Ukrainian media reported, quoting the company.
"This technical solution will be in effect until the planned debt restructuring in the coming months is complete. Ukrenergo, together with the Ukrainian government, is taking all necessary measures to reach an agreement with bondholders in the near future," the media quoted the company as saying on social networks on Wednesday.
The provisions of the law on specifics of transactions with state government-guaranteed debt, local debt and state derivatives, as well as the two governmental resolutions and the order of the Energy Ministry, which is Ukrenergo's authorized management body, are the grounds for terminating the payments, it said. These regulations were adopted as part of Ukraine's compliance with the terms of cooperation with the International Monetary Fund.
"Ukrenergo informed its partners and creditors on the temporary suspension of Eurobond payments and assured them of the company's operational and financial stability. We have continued to fulfill our obligations and functions stipulated by the Ukrainian legislation and the company's charter. In particular, this concerns the current tasks, including preparing for the winter season, rebuilding, providing protection and strengthening the Ukrainian energy system's resilience under martial law," it said.
Ukrenergo plans to arrange negotiations with representatives of bondholders, in particular the European Bank for Reconstruction and Development, in the near future to agree on fair and mutually acceptable changes to the terms of their issue to secure Ukrenergo's long-term financial sustainability, the company said in a statement on its website.
The parties agreed in 2022 to defer payments on the bonds, which helped support it amid the crisis and significantly contributed to its financial resilience over the past two years, it said.
The suspension of Eurobond payments is a technical decision of the company's shareholder, which has nothing to do with financial and operational performance, governmental sources told Ukrainian media. The establishment of the company's new supervisory board is mandatory for completing the Eurobond restructuring, which is needed following Ukrenergo CEO Vladimir Kudritsky's dismissal and the early resignation of two independent members of the supervisory board, the sources said. A new supervisory board is to be formed by December 9.
According to the memorandum on economic and financial policies for the IMF's fifth review of its Extended Fund Facility (EFF), following the successful restructuring of Eurobonds this August Ukraine intends to restructure a number of other obligations to private creditors, including on GDP warrants and Ukrenergo's government-guaranteed Eurobonds, and allows for another restructuring, if required, closer to the end of the EFF in 2027.
The contacts have already been established with the holders of GDP warrants and Ukrenergo's bonds, and a moratorium on state payments on these tools has been imposed.
According to the government's resolution, payments on the government-guaranteed obligations under Ukrenergo's Eurobonds worth $825 million originally issued in 2021 and maturing on November 9, 2028, will be suspended from November 9.
