NEC "Ukrenergo" will temporarily suspend payments on debt obligations related to "green" sustainable development bonds starting from November 9, the company announced.
"This technical decision will remain in effect until the planned debt restructuring is completed in the coming months. "Ukrenergo," in cooperation with the Ukrainian government, is taking all necessary measures to reach an agreement with bondholders in the near future," the company reported on Facebook on Wednesday.
According to the announcement, the basis for halting payments is outlined in a specific law (Law of Ukraine "On the Specifics of Transactions with State, State-Guaranteed Debt, and Local Debt, as well as State Derivatives"), along with two resolutions from the Cabinet of Ministers and an order from the authorized managing body of "Ukrenergo" from the state – the Ministry of Energy. These regulations were adopted as part of Ukraine's compliance with the conditions of cooperation with the International Monetary Fund.
"Ukrenergo" has informed its partners and creditors about the temporary suspension of payments on eurobonds and reassured them of the company's operational and financial stability. We continue to fulfill our obligations and perform functions stipulated by Ukrainian legislation and the company’s charter. In particular, regarding current tasks – preparation for winter, restoration, establishing protection, and enhancing the resilience of Ukraine's energy system under martial law," emphasized NEC.
According to the announcement on the company’s website, it plans to organize negotiations with representatives of the bondholders (in particular, the EBRD – ER) in the near future to agree on fair and mutually acceptable changes to the terms of their issuance to ensure the long-term financial stability of "Ukrenergo."
The company reminded that in 2022, the parties agreed to postpone payments on the bonds, which helped sustain it during wartime and significantly contributed to financial stability over the past two years.
As sources from "EnergoReforms" in the government commented, the suspension of payments on eurobonds is a technical decision by the company's shareholder, unrelated to financial and operational indicators. They also noted that a necessary condition for completing the restructuring process of the eurobonds is the formation of a new supervisory board, which is required following the dismissal of NEC "Ukrenergo" Chairman Volodymyr Kudrytsky and the premature resignation of two independent supervisory board members due to this. The new supervisory board must be formed by December 9.
As reported, citing a memorandum on economic and financial policy for the 5th review of the EFF program with the IMF, Ukraine intends to carry out a restructuring of several remaining obligations to private creditors after successfully restructuring eurobonds in August of this year, including GDP warrants and state-guaranteed eurobonds of NEC "Ukrenergo," and also considers another restructuring if necessary closer to the end of the EFF program's completion in 2027.
It is specified that contacts have already been established with holders of GDP warrants and "Ukrenergo" bonds for dialogue with holders of such instruments, and a moratorium has been introduced on state payments related to these instruments.
According to government resolution No. 977, payments on state guarantees for eurobonds of "Ukrenergo," initially issued in 2021 for $825 million, will be suspended starting November 9, with a maturity date of November 9, 2028.