12 Dec 2022 15:25

Ukrzaliznytsia proposes deferring Eurobond payments by 2 years

MOSCOW. Dec 9 (Interfax) - The Ukrainian state railway company Ukrzaliznytsia has proposed to the holders of its Eurobonds worth in total $894 million, including a $594.9 million issue maturing in 2024 and $300 million maturing in 2026, that the payments on them be deferred by 24 months.

"Given the group's projections for fiscal years 2022 and 2023 and the financial plan for 2023 prepared and subject to approval by the Ukrainian government, [...] the group believes it is time to initiate a consent request to complete the process before interest payments in January 2023," Ukrzaliznytsia said in its stock exchange filings.

The company referred to damage caused to its infrastructure and said it expected to generate a net loss from transportation operations in 2022 and 2023, which it expects to mostly be offset by subsidies from the state budget, which it would be able to use to cover operating and capital expenses. It also said it expected that capital expenditures could be partially covered by financing from international financial institutions in this period.

Ukrzaliznytsia pointed out that, "despite unprecedented economic and operational uncertainty," it was able to successfully and fully service the interest payments due on its Eurobond debt in July 2022.

While Ukraine managed to secure a similar two-year deferral of payments on its Eurobonds this past summer, "the operating environment and economic conditions have continued to deteriorate" since then, it said.

Ukrzaliznytsia offered the holders agreeing to have their payments deferred a reward of 0.5% of par, with interest also accrued on the deferred coupon payments at current rates, which the issuer can either pay in full or in part during said two-year period, or capitalize.

Applications from holders of 2026 Eurobonds shall be accepted until December 16 inclusive, and from 2024 Eurobond holders until December 20. A shareholder meeting concerning 2026 Eurobonds is scheduled for December 21, and the decisions concerning both issues will be announced the same day.

Ukrzaliznytsia has proposed deferring maturity of 2024 Eurobonds from July 9, 2024 to July 9, 2026, and that of 2026 Eurobonds from July 15, 2026 to July 15, 2028.

Ukrzaliznytsia said it intends to treat the holders of both Eurobond issues equally, but reserves the right to waive the "cross condition" at any time before announcing the results.

The company has issued $894.9 million in Eurobonds through Rail Capital Markets plc. The issues are supposed to be redeemed in single tranches of $594.9 million in July 2024 and $300 million in July 2026.

Coupon payments are to be made semiannually in July and in January at fixed rates of 8.25% and 7.88% respectively.