Ukrainian Cabinet unhappy with Naftogaz efforts to change terms of Eurobonds

MOSCOW. July 22 (Interfax) - Ukraine's Cabinet has deemed the Naftogaz Ukraine management board's work with the issuer of the company's Eurobonds, Kondor Finance plc, on changing the terms of the bonds to be unsatisfactory and is now, in actual fact, overseeing the deal.

According to a July 21 government order posted on the government website, the government has ordered Naftogaz to enter into a contract with Kondor Finance on the terms set by the Cabinet. The order does not specify the actual terms.

Naftogaz is also supposed to clear its actions on entering into a deal with Kondor Finance with the government.

The Cabinet issued an order on July 7 allowing Naftogaz to change the credit terms with Kondor Finance ahead of the redemption of a Eurobond issue totaling $335 million.

Naftogaz, acting through Kondor Finance, appealed to the holders of almost $1.5 billion of its bonds with a proposal to defer coupon payments on them by two years, as well as defer the redemption of the $335 million in 2022 Eurobonds by two years.

There are currently three outstanding Naftogaz Eurobond issues, all of which were placed in 2019, including 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 (with the EBRD buying up a fifth), and a seven-year issue of $500 million placed at 7.625% in November. The $335 million issue matured on July 19, 2022, when the company was also due to pay interest on these bonds and the bonds maturing in 2024.

Naftogaz has proposed to pay all coupons on the 2022 and 2024 bonds on July 19, 2024 and to redeem the 2022 bonds the same day. The company wants to pay the coupons on the 2026 bonds on November 8, 2024.

Naftogaz is not offering bondholders any premium for the proposed deferral. The voting deadline was July 21 and the results are scheduled to be announced on July 26.