Govt asks NBU to allow Metinvest to conduct settlements with foreign creditors in foreign currencies
MOSCOW. Feb 15 (Interfax) - The Ukrainian government has asked the National Bank of Ukraine to allow the sale of currency to companies that are part of Metinvest, the country's biggest mining and metals holding, to conduct settlements on Eurobonds and with foreign creditors.
Ukrainian media reported that orders published on the government website contained a request to provide individual permits for cross-border foreign currency transfers.
An addendum includes a request for a separate permit for Metinvest's Northern and Ingulets mining and processing plants to carry out cross-border foreign currency transfers.
It explains that Metinvest is one of Ukraine's biggest employers and taxpayers. The group paid UAH 14.6 billion in taxes and other dues to budgets at all levels in Ukraine in 2023. The group is also one of the country's biggest earners of foreign exchange revenue. The group has since the first days of the crisis allocated UAH 4.8 billion in aid for Ukraine and its citizens, more than UAH 2.5 billion of it for the needs of the security and defense forces.
The group's total financial debt as of June 30, 2023 was approximately $1.9 billion, 87% of it on Eurobonds issued by parent company Metinvest B.V. (Netherlands). There are currently four Eurobonds issues outstanding: 240.695 million euros of 5.625% bonds maturing in June 2025; $493.871 million of 8.5% bonds maturing April 2026; $332.354 million of 7.65% bonds maturing October 2027; and $500 million of 7.75% bonds maturing in October 2029.
Metinvest B.V. paid more than $139 million and $132 million on Eurobond coupons in 2022 and 2023, respectively. It fully redeemed $176.335 million of outstanding 7.75% bonds maturing on April 23, 2023.
The group has paid around $508 million from its working capital on Metinvest B.V. bonds in 2022-2024.
The request states that as of today the group has exhausted its internal financial reserves to service its debt. In addition, the payment of such considerable funds to creditors in 2022-2024 at the expense of the parent company and international trading company has reduced working capital, which is now insufficient to restore production to near its pre-crisis level due, among other things, to a significant increase in logistics and distribution costs under martial law in Ukraine.
As of January 31, 2024, there were three loans between Metinvest B.V. and its Ukrainian enterprises on which the total debt was $396.629 million. The request details these agreements.
In light of this, the government is asking the NBU to allow Northern and Ingulets mining and processing plants to conduct $396.629 million in cross-border transfers in favor of Metinvest B.V. with a view to honoring commitments under the loan agreement, including $353.793 million principal and $42.836 million interest.
According to an NBU resolution on the banking system's operations during martial law, issued on February 24, 2022, Ukrainian banks are prohibited from conducting cross-border foreign currency transfers from Ukraine. An exception is made for transfers based on separate regulatory approvals adopted on the basis of government orders. An order must contain a specific request for permission to conduct the relevant currency transaction.