Naftogaz Ukrainy in the evening on October 20 postponed the placement of dollar-denominated eurobonds indefinitely, a source in the market has told Interfax-Ukraine.
According to him, a corresponding report from the company has been sent to investors.
Earlier on October 20 it was reported that the benchmark for the yield of U.S. dollar eurobonds was 9-9.25%. The company planned to place a new issue with maturity in February 2027 and has already opened the order book. Citi is the sole organizer of the placement.
NJSC Naftogaz Ukrainy has offered to buy back all its eurobonds for up to $ 335 million maturing in 2022 by issuing new eurobonds, and in the absence of sufficient supply from their holders – also eurobonds maturing in 2024, keeping the total ransom amount of $ 335 million.
“Naftogaz made offers and a corresponding issue of new bonds to extend the maturity of its debt. Naftogaz expects to finance the offers at the expense of net proceeds from the issue of new bonds,” Kondor Finance Plc, through which the eurobonds were issued, said on the Irish Stock Exchange.
Naftogaz recalls that its 2022 eurobonds with a par value of $ 335 million with a coupon of 7.375% and 2024 eurobonds with a par value of EUR600 million with a coupon of 7.125% are in circulation.
According to the promulgated terms, 2022 eurobonds are redeemed at a price of 102.875% of the par value, 2024 eurobonds at 98.25% of the par value.
The early deadline for applications is October 27 inclusive. The early expected settlement date is October 29, the final one is November 13.
The dealer-manager of the offer is Citigroup Global Markets Limited.
U.S. Businessmen and former diplomat Amos J. Hochstein has notified NJSC Naftogaz Ukrainy that he leaves the company as independent director in the supervisory board of the company and among the reasons behind his decision to leave the supervisory board, Amos Hochstein mentioned growing opposition to gas market reforms and the transformation of Naftogaz into an independent and efficient company, Naftogaz said on Monday.
“Naftogaz faces increasing sabotage from corrupt forces,” Hochstein said in his column in KyivPost publication.
NJSC Naftogaz Ukrainy plans to make profit based on the results of its activities in 2021-2024, the press service of the company has told Interfax-Ukraine.
Earlier, the Ministry of Finance of Ukraine published a report on fiscal risks and their impact on the state budget, in which it predicted that under the baseline scenario, Naftogaz will receive losses in the amount of UAH 4.3 billion in 2020, and UAH 7.5 billion in 2021, UAH 5.5 billion in 2022, and UAH 4.4 billion in 2023. According to the optimistic scenario for 2020-2023, the Ministry of Finance also expects extremely unprofitable activities from Naftogaz.
At the same time, Naftogaz notes that the draft financial plan assumes profitable activities in 2021-2024. The process of updating forecasts for 2021-2025 is underway.
“Like any other company, Naftogaz must consider the impact of the pandemic on our operations, the markets in which we operate, and on our customers. There are several important factors that can affect the results, but are outside the company’s control. This is the impact of the pandemic on the demand for energy in Ukraine and in the world, the severity and duration of quarantine, the resolution of the problem of accumulated debts of market participants, payment discipline, etc.,” the press service said.
“We are closely following Ukrainian and world statistics, recommendations of the leading analysts and legislative initiatives in the preparation and adjustment of our actions. So, despite the market situation, in the first half of the year we initiated a revision of capital and other costs to reduce expenses and increase efficiency,” the company said.
As reported, Naftogaz Ukrainy posted net loss in January-June 2020.
Naftogaz has begun pilot operation of the energy trading and risk management system (ETRM).
“This product accelerates business decision making by creating a unified database of counterparties, contracts and agreements and real-time data exchange between the functions of front, middle and back offices, as well as security, compliance, risk management and financial control. This helps increase efficiency, transparency and control over gas trading operations, as well as improve the management of commercial risks and the quality of management decisions,” the statement says.
Naftogaz notes that thanks to the introduction of this system, it takes 15-20 minutes to negotiate a contract for the sale or purchase of gas, while earlier this required several days and about 20 signatures.
The TRMTraker system from Pioneer Solutions LLC was chosen to implement ETRM. Subsequently, the ETRM solution can also be introduced for trading in electricity, oil and petroleum products.
“Now Naftogaz Commerce can systematically analyze the risks of trading positions and accelerate the support of signing transactions, and at the subsequent stages of implementation analyze settlements with counterparties and simulate the state of the gas portfolio subject to changes in prices, exchange rates, volumes of gas production and consumption,” the company said.
Naftogaz plans to focus its efforts on the growth of new hydrocarbon resources and, for this purpose, increases the role of the geological direction, the director of the Exploration and Production division of the group, Oleksandr Romaniuk, has said in an interview with Interfax-Ukraine.
“It all starts with geology. We want to create the best geological expertise in the region, we believe that we can do it. We have a strong geological school, which began to be supported by legionnaires, including our guys who worked in Western companies. We now have a new head of the geological direction, who grew up in foreign oil and gas companies. But we do not need expertise for the sake of expertise. We want to radically change the situation with the resource base, so we are changing the structure,” he said.
According to him, in order to gain access to all available geological information and developments of scientists, the group signs agreements with Nadra Ukrainy, the Ukrainian State Geological Research Institute, the Institute of Geological Sciences of the National Academy of Sciences of Ukraine.
“In addition, we attract external expertise, which will help structure and more correctly determine the goals. We have created an expert council on the basis of the division, which attracted people who built the industry and have unique knowledge about Ukrainian subsoil,” Romaniuk added.
The top manager of Naftogaz noted that the group’s priorities are areas where it is possible to increase proven reserves from 50 billion cubic meters, since the company’s existing resource base does not compensate for the natural decline in production.
