Naftogaz of Ukraine timely and fully transferred funds for the coupon payment on November 8 for its eurobonds amounting to $500 million maturing in 2028, reported the chairman of Naftogaz, Alexey Chernyshov.
In the sidelines of the 10th Kyiv International Economic Forum (KIEF), he informed the Interfax-Ukraine agency that "Naftogaz of Ukraine" adheres to and will continue to uphold its obligations, which is a fundamental principle of the company.
As previously reported, in July 2022, Naftogaz began negotiations with holders of three issues of its eurobonds regarding their restructuring. Quickly – in August of the same year – it managed to restructure one issue of eurobonds worth EUR600 million with a coupon rate of 7.125%, postponing the maturity date to 2026, while negotiations for the other two issues dragged on, leading the company to default. Specifically, on November 8, 2022, Naftogaz did not make interest payments on a $500 million eurobond issue with an original maturity date in 2026, also proposing to postpone their maturity by two years and engaging financial advisors for restructuring.
At the end of May 2023, Naftogaz announced agreements with investors, accepting some improved terms for holders of two defaulted issues and paying 5% of the principal amount along with overdue interest. The main changes included some tightening of covenants, cash payment of the last semi-annual coupon during the two-year deferral period, establishment of a fund for interest payments on the 2026 bonds, and the introduction of a restructuring fee, though without any details provided.
As previously, Naftogaz proposed to defer 50% of the principal debt on the $375 million eurobonds for two years – until July 19, 2024, with the remaining 50% until July 19, 2025. Regarding the deferral of the principal amount for the $500 million eurobonds, the proposal also remained unchanged: 50% for one year, until November 8, 2027, and another 50% until November 8, 2028, along with a 0.5% fee on the principal amount for consent.
The restructuring proposal included an increase in the interest rate for the 2025 eurobonds from 7.375% to 7.65% annually, and for the 2028 eurobonds to 7.625%.
Naftogaz decided to retain the right to independently decide whether to pay interest during the two-year deferral period or to capitalize it, except, as mentioned above, for the last coupon: for the 2025 eurobonds – from January 19 to July 19, 2024, and for the 2028 eurobonds – from May 8 to November 8, 2024.
Additionally, a new proposal was introduced to create a fund for accumulating funds for interest payments on the 2028 eurobonds: the amount of one coupon of $19.06 million or its equivalent in hryvnias on the day the restructuring takes effect, then $3 million on January 15 and February 15, 2024, and another $13.06 million on March 31, 2024.
In June 2023, these terms were approved by the government, and by the end of July, eurobond holders ultimately supported the restructuring. Throughout September 2023, Naftogaz completed the restructuring of debt for all eurobond issues and made all agreed payments to eurobond holders.
According to Naftogaz's report, as of the end of June 2024, the company had accumulated $38.1 million in a special account to ensure the payment of coupon payments on the $500 million 2028 eurobonds.
In July 2024, the deferral period for payments regarding two issues of eurobonds, as stipulated in the loan agreement, came to an end, and Naftogaz exercised its right to capitalize deferred coupon payments and made the necessary payments in full. Specifically, on July 19, $12.7 million was capitalized for the 2025 eurobonds, $12.2 million was paid in current coupon payments, and 50% of the principal amount – $165.5 million. For the eurobonds worth EUR600 million, Naftogaz capitalized EUR94.6 million and paid coupons totaling EUR42.8 million.
Then, at the beginning of November this year, Naftogaz again exercised its right to capitalize deferred interest on the 2028 eurobonds amounting to $83 million 779,977 thousand, resulting in the nominal debt amount for this eurobond issue increasing to $583 million 799,977 thousand.
During a conference call with investors organized by Dragon Capital in July, Chernyshov noted that Naftogaz would be able to make all necessary payments on existing debts due in 2025, but is considering the possibility of restructuring debt payments due in 2026, which primarily consists of payments on eurobonds.
According to the Frankfurt Stock Exchange, the price of Naftogaz's eurobonds maturing on November 8, 2028, rose by 0.33% on Thursday to 84.91% of par, while the price for the eurobonds worth EUR694.6 million maturing on July 19, 2026, remained unchanged at 74.34% of par.
Naftogaz's net consolidated profit for the first half of 2024 increased 3.7 times compared to the same period last year, reaching 24.414 billion UAH, while revenue from sales grew by 28.1% to 143.373 billion UAH.