DTEK Energy, Ukraine’s largest private energy holding company, has approached the holders of its Eurobonds maturing in 2027 with a proposal to review the existing limited payment arrangements and commit to repurchasing up to $100 million of bonds each year.
“The Group intends to continue its debt reduction strategy and proposes to include additional commitments by the Issuer to reduce its debt,” the company said in a request to the Irish Stock Exchange on Monday, for which it is willing to pay 1% of the nominal value of the bonds.
DTEK Energy clarified that bonds with a nominal value of $930.91 million out of a total issue of $1 billion 466.87 million are currently outstanding.
It is noted that despite the challenges and disruptions caused by the war in Ukraine, the group has proactively reduced its nominal debt by approximately 47%, or $750 million, since the start of the war by combining semi-annual amortization of $8 million to $10 million every six months, bond repurchases in November 2022 under the issuance agreement, as well as voluntary repurchase offers in a Dutch auction in December 2022, March and October 2023, respectively, and other market bond repurchases.
“As of the date of signing the Request for Consent, the Group’s outstanding debt is approximately $931 million,” the document says.
According to the document, the ability to continue the declared debt reduction strategy depends on the current restrictions of the NBU, i.e., the ability of the holding’s Ukrainian subsidiaries to provide the issuer, DTEK Energy B.V., with foreign currency in the required amounts.
As part of the proposal to Eurobond holders, the company will be required to reserve the amounts not used to reduce the debt by the declared $100 million in a separate account in Ukraine, with limited ability to use such funds for short-term investments.
In addition, DTEK Energy is offering to amend its covenant package to enhance the company’s investment attractiveness and improve its financial and operational flexibility to make strategic investments, such as removing restrictions on future business lines and increasing the thresholds for requiring independent valuations and bondholder consent.
“DTEK Energy’s operational and strategic vision is to continue supporting Ukraine’s energy system by generating as much electricity as necessary to meet national demand, as well as providing balancing and other services. In line with this vision, the holding company is continuing its repair campaign to repair or replace damaged or obsolete equipment, which requires significant capital investment,” the document says.
According to the document, the bonds may be repurchased through tender offers or private buybacks, in one or more transactions, and any remaining amount up to the NBU limit will be used to repurchase bonds at par value together with semi-annual amortization of $10 million.
Applications from bondholders will be accepted until May 26 of this year inclusive.
