Naftogaz of Ukraine faced the risk of default

The largest oil and gas company of Ukraine - Naftogaz - invited the holders of its Eurobligations to transfer payments for two years, as the company in the conditions of war risks encountering problems when paying debt. It is reported by Interfax with reference to the exchange message to the state -owned company.

The appeal was made through the issuer, Kondor Finance PLC. We are talking about papers for a total of $ 1.5 billion. “Naftogaz” offers borrowers to delay the payments on paper for two years, we are talking about bonds of 2019 of release. The first part of the release was three years and with the repayment of July 18, 2022 in the amount of $ 335 million at 7.375%, the second part was 600 million euros at 7.125% for a period of five years, finally a third part - by $ 500 million with a yield of 7.625% for a period of seven years. The company intends to convince investors to repay the first and second part of the release on July 19, 2024, and transfer coupons for Eurobligations-2026 to November 8, 2024.

“In the light of protracted circumstances affecting Ukraine as a result of the ongoing military invasion of the Russian Federation and its impact on the energy security of Ukraine, the issuer at the request of the borrower initiated a real request for consent to receive the approval of bond holders to facilitate the maintenance of available borrower to support the strategic priorities of Ukraine,” the exchange report said.

Within the framework of the proposal, the state -owned company intends to exclude the likelihood of a default on papers if the company's proposals approve the creditors. The official reason for the deferred “Naftogaz” calls the demand of the Ukrainian government by October 1 to fill out the storage of gas so as to steadily pass the heating season and ensure the heat supply of citizens and the company.

The company estimates the costs of these tasks at $ 7.8 billion, for these funds Naftogaz will be able to download 5.6 billion cubic meters of gas. The company also notes that it is forced to sell gas to the population at prices much lower than the average European ones, which negatively affects its financial situation. Special attention is paid to the war with Russia, the company calls it the main reason for the fall of the economy and slowing down business activity.

“It is possible that the borrower will not be able to observe the current provisions of the relevant credit agreements until the invasion continues,” the Ukrainian company said.

The company does not plan to pay extra money for delay, voting among eurobond holders will be held on July 21, the results will announce on July 26. The agent of Naftogaz will be the American financial conglomerate Citigroup to borrowers. The agency notes that against the backdrop of the difficulties with repaying debts during trading on the Frankfurt Exchange, the company's bonds collapsed. The release of repayment in 2024 fell to 10% of the initial cost (nominal), and with repayment in 2026 - up to 20%.

The permanent competitor of Naftogaz, the Russian state -owned company Gazprom, had previously encountered problems in repaying their own debts. The Russian monopolist cannot repay his papers because of the sanctions, since the payment operator-Citigroup-does not transfer money to the owners of the papers.