Naftogaz CEO Says Ukraine Pushed It to Delay Bond Payments


Ukraine’s state-owned energy firm NJSC Naftogaz Ukrainy was surprised by a government order to save cash for gas purchases and to ask the holders of roughly $1.4 billion of its bonds to delay debt payments, the company’s chief executive said.

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(Bloomberg) — Ukraine’s state-owned energy firm NJSC Naftogaz Ukrainy was surprised by a government order to save cash for gas purchases and to ask the holders of roughly $1.4 billion of its bonds to delay debt payments, the company’s chief executive said.

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“We didn’t expect that,” Chief Executive Officer Yuriy Vitrenko told Bloomberg in an interview in Kyiv on Thursday, referring to the government’s order. “We had been planning our finances in a way that would allow both to redeem Eurobonds and buy gas.”

Naftogaz on Monday asked investors to agree to amending its dollar and euro notes maturing on July 19, in 2024 and in 2026 so that it doesn’t have to pay principal or interest in the next two years. That would let the company save $546.6 million, according to Bloomberg calculations.

The company needs to buy as much as 5.6 billion cubic meters of natural gas for more than 230 billion hryvnias ($7.8 billion) to secure stable deliveries to households and companies through the fall and winter, it said then.

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But the amount of gas it must purchase could in fact be lower as Ukraine’s consumption has shrunk since Russia invaded the country in February, Vitrenko said.

“From an economic point of view, the big gas purchases are a too expensive pleasure,” the CEO said. “But now military logic works and thus, if it’s possible to accumulate a reserve, it must be done.”

Ukraine’s Energy Ministry, which is in charge of the country’s oil and gas reserves, didn’t have an immediate comment when reached by Bloomberg by phone.

Bondholders in Focus

Some of Naftogaz’s bondholders were advised by law firm Dechert to reject the Ukrainian company’s request to delay debt payments, Reuters reported on Thursday.

Vitrenko said the company is in contact with its largest bondholders about the consent solicitation offer that will be voted on July 21. There is a five-day grace period, so talks with creditors could be extended to July 26, he said.

“I hope that bondholders understand that this is not a normal situation, this is war,” he said. “But even in such circumstances, we try to be honest with our bondholders. I have calls with them, in which I apologize that this was done last-minute and is a real mess.”



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