24 May 2023 16:06

Govt asks NBU to allow Naftogaz to pay $1.5 mln to Lazard, $400,000 to others for Eurobond restructuring

MOSCOW. May 24 (Interfax) - Ukraine's Naftogaz will pay Lazard Freres S.A.S., hired in November last year, $1.5 million for its services as financial consultant to restructure $335 million of bonds maturing in 2022 and $500 million maturing in 2026.

Ukrainian media report that in keeping with an order by the Cabinet of Ministers of May 23, published on Wednesday, the government is asking the National Bank of Ukraine for permission to make this payment.

The document states that Naftogaz has current obligations to pay commission and expenses related to the restructuring of bonds in the amounts of $1,747,290, as well as 23,590 euros and 94,730 pounds sterling.

Apart from the $1.5 million for Lazard, Naftogaz is due pay $223,020 to Citigroup Global Markets Limited and $14,280 to Citibank, N.A., London Branch, and the rest to the issuer of the notes, Kondor Finance plc.

The government said that, unlike the two aforementioned bond issues, which have not yet been restructured, it had been possible in August last year to reach agreement with the holders of another issue worth 600 million euros due in 2024 to postpone payments on them by two years.

Total commissions and expenses related to this transaction were approved in an amount equivalent to $700,000. In addition to Citigroup and Citibank, the recipients include Freshfields Bruckhaus Deringer Rechtsanwalte Part GmbH, Freshfields Bruckhaus Deringer LLP, Ekvo Law Firm, White & Case LLP, Avellum Partners LLC, Allen&Overy LLP, Wilmington Trust (Kondor Finance) and Law Debenture Corporate Services Limited.

Naftogaz CEO Alexei Chernyshov said a week ago following a meeting with Lazard Freres that the company was preparing to finalize proposals to restructure the 2022 and 2026 bonds and to continue the dialogue with holders.

Naftogaz in March improved its proposal for restructuring the 2022 bonds, which it defaulted on in the summer of 2022, while the terms for defaulted 2026 bonds remained the same.

It is proposed to increase the t rate on the 2022 bonds from the date of approval of the proposal from 7.375% to 7.65% per annum, and to pay another 5% of the principal amount along with the overdue coupon of July 19, 2022, which amounts to $12.35 million and $16.75 million, respectively, a presentation on Naftogaz's website said.

For the 2022 Eurobonds, Naftogaz offers to defer the payment of 50% of the principal debt by two years until July 19, 2024, and the remaining 50% until July 19, 2025, whereas in February it proposed redeeming the entire issue on July 19, 2024.

As for the deferral of the 2026 bonds, the proposal remained the same: 50% by one year, until November 8, 2027, and another 50% until November 8, 2028.

The payment of interest on the 2022 bonds due on January 19, 2023, July 19, 2023, and on January 19, 2024, would be postponed until July 19, 2024. As for the 2026 bonds, the payment of interest would be moved from November 8, 2022, May 8, 2023, November 8, 2023, and May 8, 2024, to November 8, 2024.

As in February, an additional premium of about 0.5% is provided only for the 2026 bonds.