Naftogaz to ask all int'l creditors for two-year deferral of payments
MOSCOW. July 14 (Interfax) - Ukraine's Naftogaz, which earlier this week asked for a two-year deferral of interest payments and Eurobond redemption, will make a similar request to all other international creditors, the issuer of its bonds, Kondor Finance Plc, said in a stock exchange filing.
"The issuer and the borrower have first approached the noteholders in accordance with their regulatory obligations. The borrower may now negotiate payment deferrals for other international debt obligations to which it is a party. In cases where such loans are used and interest is paid, it is expected to receive a two-year deferral of interest payments from all other international creditors," the filing said.
Naftogaz added that it recently signed a loan deal with the European Bank for Reconstruction and Development to support natural gas purchases for the upcoming 2022/2023 heating season.
"This loan is subject to the satisfaction of certain pre-conditions before it can be used and will be reviewed by the parties amid this statement of consent [offer to Eurobond holders for deferred payments and renegotiation of covenants]," the statement said.
Naftogaz has, via Kondor Finance, asked the holders of almost $1.5 billion of bonds to consider deferring coupon payments on them by two years, including postponing the repayment of a $335 million issue of 2022 by the same period.
In light of the protracted circumstances affecting Ukraine and their impact on Ukraine's energy security, the issuer, at the request of the borrower, has initiated this consent request in order to obtain the approval of the noteholders to facilitate the borrower's retention of available cash to support Ukraine's strategic priorities, according to an earlier stock exchange filing.
Naftogaz has three Eurobond issues outstanding: $335 million of three-year bonds at 7.375% and 600 million euros of five-year bonds at 7.125%, both placed in July 2019 with the EBRD buying a fifth of the latter; and $500 million of seven-year bonds yielding 7.625% placed in November 2019. The $335 million issue matures on July 18.
To support its request, Naftogaz said the Ukrainian government, with a resolution dated June 17 this year, obliged the group to ensure storage facilities contain enough natural gas as of October 1 to get through the autumn-winter period smoothly, including to meet the needs of domestic consumers and heat supply organizations.
Thus, the borrower needs to purchase and import up to 5.6 billion cubic meters of natural gas for more than UAH 230 billion hryvnia or about $7.8 billion. Naftogaz is also obliged to provide natural gas to the most vulnerable consumers, primarily households, at fixed prices, which in many cases are many times lower than market prices for natural gas in Ukraine and Europe.
Naftogaz does not plan to pay any premium to holders of its bonds for deferring payments. The deadline for voting on proposals expires in the afternoon on July 21, and the meeting and announcement of the results are scheduled for July 26.
As for possible default on the $335 million bond issue, Naftogaz said the issue matures and interest is due to be paid on July 19, but there is a grace period of five business days, so there will be no default if the consent of the Eurobond holders is received on July 26, when the meeting is convened.
"The borrower will continue to consider available options if the proposals are rejected," Naftogaz said.