16 Feb 2024 09:42

Ukrainian govt asks NBU to allow Interpipe to buy forex to pay foreign creditors

MOSCOW. Feb 16 (Interfax) - Ukraine's Cabinet has asked the National Bank of Ukraine (NBU) to allow the sale of foreign currency to companies of the Interpipe pipe and wheel manufacturing group and its subsequent transfer for payments to creditors, including on Eurobonds, Ukrainian media reported citing the orders published on the government's website.

The orders concern requests for individual permits for cross-border transfers of forex assets by Interpipe Ukraine, Interpipe Niko Tube, Interpipe Nizhnedneprovsky Tube Rolling Plant (Interpipe NTRP), and Interpipe Novomoskovsk Pipe Plant (Interpipe NMPP).

Interpipe borrowed about $1 billion from international financial institutions to establish integrated production within the group, including by building an electric steel-smelting plant in Dnepr and providing it with the necessary resources and infrastructure, as well as to finance other investment projects to develop its Ukrainian enterprises. The group also issued Eurobonds.

In the course of 2024, the group is due to pay $25 million in interest on Eurobonds in May and November and about $40 million on restructuring obligations in October.

"Understanding the catastrophic consequences of refusing to service foreign financial obligations, the group decided to use the forex revenue of the group's foreign trade companies to pay debts in these two cases. But now the return of forex revenue to Ukraine is already running out and this situation is leading to a technical default and temporary suspension of the group's operations, with negative consequences not only for the group itself and its employees, but also for Ukraine as a whole," the request said.

It states that, as of January 2024, the group needed permission from the NBU to acquire more than $560 million in forex and for four of the group's companies to make cross-border forex payments to the creditor of Interpipe Ltd in order to meet obligations on current loan agreements.

Of the total, Interpipe Ukraine needs $117.4 million for principal debt and $119.6 million for interest/commissions; Interpipe Niko Tube needs $31.4 million for interest/commissions; Interpipe NMPP needs $32.9 million for principal debt and $18.5 million for interest; and Interpipe NTRP needs $97.7 million and $142.6 million, respectively.

In light of this, the Cabinet has asked the NBU for permits for payments that would make it possible to meet these obligations.

Under 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. Exceptions are made for transfers based on individual permits from the NBU issued on the basis of government orders. An order must contain a specific request for permission to conduct the relevant forex transaction.

Interpipe is a Ukrainian industrial group that manufactures seamless pipes and railway wheels. Interpipe has five manufacturing divisions: Interpipe NTRP, Interpipe NMPP, Interpipe Niko Tube, Interpipe Vtormet and electric furnace steel plant Dneprostal (Interpipe Steel).

Interpipe Limited's ultimate beneficiaries are Ukrainian businessman Viktor Pinchuk and members of his family.