1 Sep 2022 10:36

Holders of Naftogaz 2024 bonds agree to defer payments, holders of 2026 bonds refuse

MOSCOW. Sept 1 (Interfax) - The holders of an issue of Naftogaz Ukraine Eurobonds that mature in July 2024 have agreed to the company's proposal to defer payments on the bonds, the issuer of the state oil and gas company's bonds, Kondor Finance plc said in a statement.

The two-year deferral of payments was approved by 77% participants in the meeting of bondholders.

Therefore, the company can pay the principal of the debt in the amount of 600 million euros in 2026 rather than in 2024, and begin paying interest on it in 2024, Naftogaz said in a press release, adding that interest deferred in 2022-2024 will total 90 million euros (45 million euros per year).

However, the holders of the company's Eurobonds maturing in 2026 voted on August 31 to not grant a postponement.

It was reported earlier that on August 17 Naftogaz failed to get approval for a two-year postponement of interest payments and redemption for any of its three Eurobond issues, maturing in 2022, 2024 and 2026. A quorum was only gathered at the meeting of holders of the $335 million bond issue that matured in 2022, but only 22% voted for the deferral. The meetings of investors in the other two issues - 600 million euros maturing in 2024 and $500 million maturing in 2026 - failed to get a quorum, so new meetings were called.

The company said on Wednesday evening that it will consider further steps regarding the bonds maturing in 2022 and 2026 together with Ukraine's Cabinet and Finance Ministry.

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.

Naftogaz said the proposal to defer payments was necessitated by a government decision to accumulate additional reserves of natural gas for the upcoming heating season.

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 deadline for the redemption of the 2022 bonds and interest payments on them and the 2024 bonds was July 19.