The energy holding DTEK Energo asked the holders of its Eurobonds for $1.645 billion maturing in 2027 to agree to the payment of the next two coupons for the first and second quarters of this year at a rate of 3.5% per annum, with a capitalization of the remaining 4% at a rate of 8.5% per annum and paid later.
According to the company’s announcement on the London Stock Exchange, DTEK Energo expects a response from the holders by 16:00 London time on April 8.
In case of a positive answer, half of the coupon due on March 31 will be paid the next day after the approval of the Eurobond holders’ consent, and half of the coupon on June 30 – on the same day, June 30.
Earlier in March, the agricultural holding MHP, the largest producer of chicken meat in Ukraine, had already approached holders of three issues of its Eurobonds worth $1.4 billion and creditor banks worth $126 million with a proposal to defer interest payments for 270 days due to the war launched by Russia against Ukraine. MHP received a positive response from its creditors ahead of schedule.
“The revision of the conditions for making coupon payments to holders of DTEK Energy’s Eurobonds was caused by a significant deterioration in the company’s financial performance in March 2022 amid the war with the Russian Federation (…) This is an expected step during the war in Ukraine,” Interfax-Ukraine was previously explained “The company needs this step.
In the latest exchange announcement, DTEK Energy indicated that due to the war unleashed by Russia, it faced a number of serious problems and disruptions, including, among other things, a reduction in domestic demand for electricity and a decrease in its prices (up to UAH 1,800–2,000 per MWh ). In addition, exports were stopped until March 28, and after the resumption they go only to Poland and are limited to 200 MW per day, the collection of payments has significantly decreased, critical repairs and mandatory fixed costs have increased as a result of the damage incurred, and there is also a shortage of personnel and logistics. support.
The company added that on February 25, it lost control over the Luhanska TPP, and the Zaporizhzhya TPP, due to the impossibility of delivering coal reserves to it due to damage and disruptions in the operation of the railway infrastructure, operates only one unit. During March, DTEK Energy was able to operate on average only 9 to 13 units of its thermal power plants with a total capacity of only about 1,500 MW, and, accordingly, its electricity production fell by about 30% compared to March 2021, the report specifies.
As a result, the group posted negative operating cash flow for March 2022 and expects this to continue through at least the second quarter of 2022.
DTEK Energy also allows for the postponing of the publication of its audited consolidated financial statements for 2021, given the scale of disruptions in the group’s business and operating environment and the need to provide additional time for auditors to analyze conditions in Ukraine and their impact.
Earlier, when addressing creditors, the company emphasized that it had already taken a number of measures to mitigate the consequences and to rationalize operations and cash flows. Among them, in particular, the constant balancing of the necessary efficient production based on the ratio of fixed and variable costs and the collection of payments; negotiations with the regulator and other government agencies to maintain a proper business environment; minimizing capex and optimizing administrative costs.
“(…) in the current circumstances, the proposals are in the interests of the company, its creditors and all interested parties (…). DTEK Energy is confident in the understanding and support of the international investment community, which is extremely important so that it can firmly and unitedly fight for the integrity freedom and security of independent Ukraine,” the company noted on March 31, when it first announced its intention to capitalize and defer the payment of half of the next two coupons.
DTEK Energy is an operating company responsible for coal mining and electricity generation from coal within Rinat Akhmetov’s DTEK holding.
