Ukraine's DTEK Energy plans to annually buy back bonds for up to $100 mln, wants terms of issue amended

MOSCOW. May 13 (Interfax) - DTEK Energy, Ukraine's largest privately owned energy holding, has asked the holders of its Eurobonds maturing in 2027 to revise the current limited payment rules and formalize the company's commitment to conduct annual bond buybacks for up to $100 million.

"The Group intends to continue its debt reduction strategy and is proposing the inclusion of additional issuer commitments to reduce debt," Ukrainian media quoted DTEK Energy as saying in its consent solicitation published on the Irish Stock Exchange. The company is ready to pay 1% of the bonds' nominal value as an incentive.

DTEK Energy said that its outstanding bonds currently amount to $930.91 million in nominal value, out of the total issue of nearly $1.467 billion.

Despite the challenges and disruptions, DTEK Energy has acted proactively to reduce its nominal debt by approximately 47%, or by $750 million, since the start of the crisis through combining semiannual amortization payments of $8 million to $10 million, a bond buyback in November 2022 in accordance with the issue agreement, as well as voluntary Dutch auction buyback offers in December 2022 and March and October 2023, along with other market buybacks of bonds, it said.

"As of the date of the consent solicitation, the Group's outstanding debt is approximately $931 million," it said.

The company's ability to continue implementing its debt reduction strategy depends on existing restrictions imposed by the National Bank of Ukraine (NBU), i.e. on the ability of the holding's Ukrainian subsidiaries to provide the issuer, DTEK Energy B. V., with foreign currency in the required amounts, according to the document.

As part of its offer to bondholders, DTEK Energy will be required to reserve any unused funds from the annual $100 million debt reduction commitment in a separate account in Ukraine with limited options for short-term investment using these funds.

DTEK Energy's proposal also includes amending its covenant package to boost the company's investment appeal and enhance its financial and operational flexibility in terms of strategic investment, for instance by lifting restrictions on future business areas and raising the threshold for requiring independent valuations and approval from bondholders.

Bonds may be bought back via tender offers or private transactions in one or several tranches. Any remaining headroom under the NBU-set limit will be used for bond buybacks at par and jointly with the semiannual amortization of $10 million.

Applications from bondholders will be accepted through to May 26, 2025.