Page 11 - FSUOGM Week 34 2022

FSUOGM POLICY FSUOGM

Bondholders reject second proposal

from Naftogaz to delay payments

UKRAINE UKRAINE’S national oil and gas company serious impact on Ukraine, as the company con-
Naftogaz had its second proposal to defer debt tributes significantly to the country's economy
Trouble with Naftogaz payments rejected by bondholders, Ukraine and accounted for 17% of its total state budget
emerged earlier Business News reported on August 19. revenue in 2021.
this month after Trouble with Naftogaz emerged earlier this "Naftogaz is considering next steps, together
the company asked month after the company asked bondholders with the Cabinet of Ministers of Ukraine as
bondholders for a two- for a two-year payment freeze on $1.4bn of its sole shareholder and the Ministry of Finance,"
year payment freeze on bonds, including a $335mn 2022 eurobond it said in a statement. "Further information
$1.4bn of its bonds. coupon payment due on July 19. Advisors from will be communicated to noteholders when
Dechert, appointed by creditors, told bondhold- possible".
ers to reject Naftogaz’s first request last month. The main reason bondholders rejected the
The company’s next proposal was also rejected company’s proposal is because Dechert views
earlier this month, as Dechert said it had failed Naftogaz as a profitable concern and has the cash
to address the concerns of creditors. on its balance sheet to meet its obligations.
Less than 20% of the required 75% accepted “[Naftogaz] remains a sustainable business
Naftogaz’s latest proposals on its 2022 bond at a operating on a sound financial footing and does
meeting on August 17. Not enough lenders voted not face the same types of challenges confronting
on the 2024 and 2026 bonds, which have a value Ukraine at the sovereign level,” Dechert stated
of $600mn and $500mn respectively, Reuters earlier this month.
reported. Only 49% of the 2024 eurobond hold- The government ordered Naftogaz to delay
ers voted, with 74% agreeing to the proposal. the payments citing the need to preserve money
54% of holders voted on the 2026 eurobonds, to buy gas. However, this surprised chief execu-
with only 49% supporting the delay. tive officer Yuriy Vitrenko, who told Bloomberg
As such, the next meeting will take place on that the order was unexpected.
August 31, giving the company two weeks to “We had been planning our finances in a way
come up with a deal more favourable to credi- that would allow [us] both to redeem eurobonds
tors or risk staying in default. This would have a and buy gas,” he said. ™

Week 34 24•August•2022 www. NEWSBASE .com P11