DTEK Naftogaz is restructuring its debt on $425 million in eurobonds issued through NGD Holdings B.V.: it will be repaid in installments, with final repayment deferred by three years—until December 31, 2029—and the coupon rate increased from 6.75% to 9.875% per annum.
“NGD Holdings … has received the necessary consents to implement the proposals (regarding the restructuring—IF-U)… Accordingly, all consents are now irrevocable, and the proposals are effective and binding on all bondholders,” the exchange announcement states.
According to the announcement, a restructuring consent fee totaling $2.75 million will be paid to all Eurobond holders who submitted applications on May 14.
As reported, DTEK Naftogaz made restructuring proposals on April 9 of this year. The increased interest rate of 9.875% is to be applied starting April 30 of this year, and the principal amount of the debt will be paid out gradually: $27.5 million on April 30 of this year, followed by $27.5 million every six months—on December 31 and June 30—with the balance paid upon final maturity on December 31, 2029.
On April 23, the company announced that it had received consent from holders of 88.66% of the bonds, falling short of the required 90% threshold, and extended the acceptance period by seven days. As of April 30, this figure had risen to 88.87% of the bonds, and holders were given another week to participate in the deal. The issuer warned that if the 90% threshold is not met, it may pursue an alternative option requiring approval from either 50% of bondholders or holders representing 75% of the total bond value.
As part of the restructuring, bondholders also allowed DTEK Naftogaz to withhold the publication of financial statements until the end of martial law, as resolutions by the regulator, the National Energy and Utilities Regulatory Commission (NEURC), restrict the ability to publicly disclose certain financial and operational information and data.
In justifying the restructuring, DTEK Naftogaz cited the moratorium imposed by the National Bank of Ukraine, which significantly limits DTEK Naftogaz’s ability to make cross-border transfers of funds from Ukraine to finance bond payments. It was also noted that Russia has damaged the group’s infrastructure facilities four times through shelling. Repair work is ongoing and is expected to require total capital expenditures of approximately EUR25 million.
DTEK Naftogaz clarified that consolidated revenue from the sale of gas products (including sales of natural gas, gas condensate, and purchased natural gas) decreased from UAH 27.04 billion in 2023 to UAH 19.84 billion in 2024, mainly due to the natural depletion of wells.
“Mainly due to the impact of the NBU moratorium, the Issuer expects that it will not be able to repay the Bonds on the maturity date (December 31, 2026),” the company stated.
It also noted that its subsidiaries NGD and Kosul hold rights to develop certain deep-horizon project areas that have particularly complex geological and technical characteristics, and therefore will require significantly greater capital investment for development than more traditional project areas. As a result, they have not yet developed such blocks, but in the near future, it is proposed to transfer the license rights for them to one or more new SPV project companies, which will then attempt to develop these blocks by sharing project risks, in particular by engaging one or more joint ventures and financial partners.
To implement the projects, DTEK Naftogaz also requested the creditors’ consent for the possible creation of new direct or indirect subsidiaries that will act both as operating companies for the SPVs and as holding companies for one or more SPVs. It also sought consent for the sale and transfer to one or more SPVs of the subsoil use rights for NGD and Kosul regarding two licensed blocks at a depth of over 6,250 meters, with the subsequent involvement of third parties at fair market value.
In November 2022, companies within DTEK Naftogaz acquired the rights to develop two gas fields in the Poltava region at a public auction: the Maiorivska area for UAH 1.102 billion and the Birkivsko-Zinkivska area for UAH 211 million.
According to data from the Frankfurt Stock Exchange, DTEK Naftogaz bonds are trading at 92.68% of par value. On the day the restructuring proposal was announced, their price stood at 91% of par value.
