Naftogaz makes new offer to bond holders to defer payments, now on all three issues

MOSCOW. Aug 3 (Interfax) - Naftogaz has sent the holders of its Eurobonds a new solicitation to defer principal payments on them by two years, Ukraine's national oil and gas company said.

The new solicitation, sent via bond issuer Kondor Finance Plc, proposes to defer repayment and, accordingly, extend maturity by two years, not only for 2022 Eurobonds but also 2024 and 2026 Eurobonds.

The requested deferral on maturities and interest payments, in terms of cash flows, is broadly in line with the terms proposed by other Ukrainian state-owned issuers and the terms included in the consent solicitation initiated for Ukrainian sovereign bonds on July 20, 2022.

Naftogaz said that the launch of the new consent solicitation was approved by a government resolution No. 670 dated August 1, 2022.

The government "strongly encourages investors to support these proposals, which are part of Ukraine's efforts to proactively manage its debt obligations and the debt obligations of important government entities to investors, while prioritizing important strategic goals," the company said.

The deadline for voting on the consent solicitation is 16:00 on August 12, and the meeting and announcement of the results is scheduled for August 17.

Naftogaz CEO Yuriy Vitrenko has been quoted as saying that "in order to be granted consent from the Eurobond holders at the first meeting, the quorum should consist of 2/3 of the total face value of Eurobonds, and 75% of the meeting participants should cast their votes in favor."

The Ukrainian government decided on July 21 that the Naftogaz board's work with the issuer of its Eurobonds, Kondor Finance plc, to change the terms of the securities was unsatisfactory and told the company to conclude a new contract with Kondor Finance on terms set by the government. The terms themselves were not indicated in the directive.

Naftogaz had initially 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 wanted to pay the coupons on the 2026 bonds on November 8, 2024. However, bondholders rejected this proposal, while the government prohibited payment, leading the company to default on two of the three bond issues on July 26.

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.