19 Apr 2010 12:18

Fitch assigns DTEK

LONDON. Apr 19 (Interfax) - Fitch Ratings assigned DTEK Finance B.V.'s prospective Eurobond issue an expected foreign currency senior unsecured rating of 'B-' Friday. The agency said in a statement that DTEK Finance B.V. is a finance vehicle for DTEK Holdings B.V., the Dutch ultimate holding company for the DTEK group, which consists of operating companies in the coal mining and power sector in Ukraine.

The statement said: "At an intermediate level these operating companies are owned by a Cyprus-registered holding company, DTEK Holdings Ltd., which Fitch rates Long-term foreign currency Issuer Default Rating (IDR) 'B-' with a Stable Outlook.

"The final rating of the Eurobond issue is contingent upon the receipt of final documentation conforming materially to information already received by Fitch.

"Proceeds from the bonds are expected to be used to refinance at least USD130m of short-term, secured debt, and for capital expenditure and general corporate purposes. The bonds will be an unsecured obligation of DTEK Finance B.V., guaranteed by DTEK Holdings B.V., DTEK Holdings Ltd., and the significant operating companies of the DTEK group (which includes the major power generation and coal mining subsidiaries).

"The draft bond documentation contains specific covenants, including limitations on payments to shareholders, restrictions on permissible business activities, requirements for arm's length affiliate transactions, financial disclosure requirements and a maximum permissible level of leverage. Events of default are comprehensive and include cross-default to other DTEK debt. The issuer has three forms of call option on the Eurobond, while investors maintain one put option, each of which is described in detail in the bond documentation. One of the issuer's call options allows the issuer to repay up to 35% of the Eurobond principal with the cash proceeds of a DTEK equity offering, within 90 days of any such offering.

"Fitch will publish a credit update and recovery analysis for DTEK's Eurobond issue once the bond prospectus is finalized."