14 Jul 2023 09:34

Naftogaz announces start of voting on 2022, 2026 Eurobond restructuring

MOSCOW. July 14 (Interfax) - Naftogaz Ukraine has announced the start of voting to secure investors' consent to restructure its Eurobonds maturing in July 2022 and November 2026.

The Eurobond restructuring process is being finalized and voting began today on the consent solicitation for restructuring bonds with maturity in 2022 and 2026, state the oil and gas company's CEO, Aleksei Chernyshov said on social media. The company hopes the vote will conclude by the end of July, he added.

He said the necessary governmental and corporate approvals have been received and preliminary agreements with bondholders have been carried out, including the creation of a guarantee fund.

Ukraine's Cabinet approved the terms of the Naftogaz Eurobond restructuring with an order (No. 554-r) issued on June 24.

Naftogaz announced at the end of May that it had reached agreements with investors to restructure two defaulted issues of Eurobonds by the end of July, one totalling $375 million with maturity in July 2022 and the other totalling $500 and maturing in November 2026. The company agreed to somewhat improve the terms of the restructuring compared to those it proposed in March.

Under the terms published on the exchange, the main changes are somewhat stricter covenants, payment of the last semiannual coupon in cash within the two-year deferment period, the creation of a fund for interest payments on the 2026 bonds and the introduction of a payment for restructuring, although without any details.

As before, Naftogaz proposed to defer payment of 50% of the principal debt on the 2022 Eurobonds by two years to July 19, 2024 and defer payment of the other 50% to July 19, 2025. For the 2026 Eurobonds, the company still proposed to pay down 50% of the principle on November 8, 2027 and 50% on November 8, 2028, as well as pay 0.5% of the principal for consent.

As in March, Naftogaz proposed to raise the interest rate on the 2022 Eurobonds from 7.375% to 7.65% (the same rate as on the 2026 Eurobonds) from the date of the approval of the consent solicitation, and to pay down 5% of the principal along with overdue interest.

Naftogaz also still wants to retain the right to repay or capitalize overdue interest fully or in part at any time before the end of the respective interest deferral periods, with the exception of the last coupon: from January 19 to July 19, 2024 for the 2022 Eurobonds and from May 8 to November 8, 2024 for the 2026 bonds.

One of the new proposals is to create a fund to accumulate money for interest payments on the 2026 bonds: the amount of one coupon totalling $19.06 million (or the equivalent in hryvnia) on the day the restructuring goes into effect, and then $3 million on both January 15 and February 15 and another $13.06 million on March 31, 2024.

The company said such covenants would also benefit the holders of its 600-million-euro Eurobond issue maturing in 2024, who were the only ones to agree to defer payments for two years last year.