Naftogaz says unable to secure consent of bondholders to freeze payments
MOSCOW. Aug 17 (Interfax) - Ukrainian national oil and gas company Naftogaz has been unable to secure the consent of Eurobond holders to a two-year freeze on payments and maturity on any of its three Eurobond issues, Ukrainian media report, quoting company information posted on the Irish Stock Exchange.
A quorum of more than two-thirds was attained only for the $335 million bonds maturing in July 2022 but only 22% of votes cast were in favor of deferment instead of the required 75%.
Meetings concerning EUR 600 million in bonds maturing in 2024 and $500 million due in 2026 were not quorate and repeat meetings will be held.
Naftogaz said the holders of 49% of the 2024 bonds registered to vote and that 74% of votes cast were in favor of the proposals.
As for the 2026 bonds, payments on which are due and which mature in November, some 54% of bondholders registered and 43% of votes were in favor of deferment.
Repeat votes on the 2024 and 2026 bonds are scheduled for 11:00 a.m. and 11:15 a.m. London time, respectively, on August 31.
"Based on the quorum at the initial meetings, the postponed meetings to be held for the 2024 and 2026 bonds are expected to be quorate," Naftogaz said.
Naftogaz said that the terms of the request for consent to have the payments deferred were approved by the government and are generally in line with the terms proposed by the sovereign and other Ukrainian state issuers on July 20, which their Eurobond holders successfully accepted last week.
The Ukrainian government has strongly recommended that investors support the latest proposals included in the operation to manage Naftogaz's obligations, which are part of Ukraine's efforts toward proactive management of its debt obligations and debt obligations of key state institutions to investors, giving priority to important strategic goals, it said.
The Ukrainian government is still prohibiting Naftogaz from making payments on Eurobonds without previous clearance, it said.
As concerns the refusal of the 2022 Eurobond holders to agree to a payment deferment, Naftogaz said it is considering further steps together with the government as its sole shareholder and with the Finance Ministry. More information will be communicated to bondholders as soon as possible in line with Naftogaz's corporate requirements, it said.
As reported earlier, Naftogaz initially offered to make all coupon payments on 2022 and 2024 bonds on July 19, 2024 and to redeem 2022 Eurobonds on the same day, and it also sought to make coupon payments on 2026 bonds on November 8, 2024. However, the Eurobond holders declined the offer, and the government banned the company to pay, which prompted it to default on two of the three Eurobond issues on July 26.
Naftogaz motivated its proposal on deferring the payments by the need to comply with the government's decision to accumulate extra reserves of natural gas for the upcoming heating season, which requires about $8 billion.
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.