JSC Ukrzaliznytsia held limited negotiations from April 1 to 8 with members of the ad hoc group (AHG) of holders of its Eurobonds with a face value of $1.055 billion, during which it presented its proposal for their restructuring, but so far without success.
“…the bondholders noted that, although they support a consensual restructuring of the bonds, they do not wish to participate in Ukrzaliznytsia’s proposal and have not submitted a counterproposal at this stage,” the company said in a statement on Friday.
It is noted that the group of bondholders decided not to seek an extension of the limited negotiations after the expiration of the specified period.
“Although Ukrzaliznytsia and the holders of restricted-rights bonds did not reach an agreement on the terms of the bond restructuring during the limited period, Ukrzaliznytsia intends to continue good-faith cooperation with AHG, in particular through the parties’ respective advisors, with the aim of reaching an agreement,” the statement noted.
According to the statement, Ukrzaliznytsia was joined by its legal advisors Clifford Chance LLP and Sayenko Kharenko, as well as its financial advisors Rothschild & Cie and FinPoint LLC, while the holders of restricted-rights bonds were joined by AHG’s legal advisors Hogan Lovells International LLP.
As stated in the restructuring presentation, Ukrzaliznytsia proposed writing off 20% of the principal amount, deferring the final repayment of the Eurobonds until June 2033, and beginning their soft amortization starting in December 2030—in six equal installments of $150 million.
At the same time, the company additionally wants to link the amount of these payments to the volume of freight traffic. “Each individual payment of $150 million may be adjusted upward or downward within the range of $112–168 million depending on the volume of freight traffic,” the presentation notes.
As for interest, in the first year (from June 2026 to June 2027), it was proposed to pay only 1.5% in cash; in the second year, 2%; in the third, 4%; in the fourth, 6%; and in the last three years, 7.75% each.
As for overdue interest, which will amount to $83 million as of June 30 of this year, Ukrzaliznytsia would also like to write off 20% of this amount, and of the remaining $67 million, pay 20% in cash—or 1.3 cents per dollar of face value—and capitalize the rest into a new instrument.
If this proposal is accepted, the company would pay only $20 million and $16 million in cash on the Eurobonds this year and next year, respectively, while in 2028 – $77 million, in 2029 – $121 million, in 2030 – $240 million, $389 million in 2031, $434 million in 2032, and $155 million in 2033.
As reported, in January 2025, Ukrzaliznytsia capitalized the coupon payments on the 2026 Eurobonds with a rate of 8.25% totaling $108.28 million, and on the 2028 Eurobonds with a 7.875% coupon rate totaling $51.9 million. This increased the outstanding amounts of these issues to $703.2 million and $351.9 million, respectively.
In January of this year, the company defaulted on $45 million in coupon payments on the 2026 and 2028 Eurobonds, due on January 9 and 15, respectively, and announced its intention to initiate a comprehensive restructuring of its financial obligations under the credit agreements related to the bonds, with the participation of qualified financial and legal advisors.
The company cited the prolonged decline in freight revenue amid a decrease in freight volumes—which is expected to reach approximately 17% in 2025— as well as an increase in attacks on the railway, the total number of which in 2025 (1,195) exceeded the combined figure for 2023–2024.
In February, the international rating agency Fitch Ratings downgraded the long-term issuer default rating (IDR) of JSC Ukrzaliznytsia to “RD” (Restricted Default) from “C,” and downgraded the long-term ratings of its Eurobonds maturing in 2026 and 2028 to “D” from “C.”
According to the presentation, in 2025, Ukrzaliznytsia saw its revenue decline by 15.6% to $2.189 billion and its EBITDA by 30.2% to $293 million, of which $270 million consisted of budgetary support. The net debt-to-EBITDA ratio rose to 5.2.
