UK court allows Ukraine's DTEK to initiate standstill scheme

By bne IntelliNews April 11, 2016

The British High Court in London has allowed Ukrainian energy conglomerate DTEK, controlled by billionaire Rinat Akhmetov, to effect a standstill scheme that will enable a long-term debt restructuring until late October, Debtwire news outlet reported on April 8.

After the court's ruling, DTEK's bondholders will be asked to vote by April 22 in favour of the scheme, offering a consideration payment to its holders equal to 0.25%. A bondholder meeting to approve the scheme has been scheduled for April 25.

DTEK proposes paying 10% of its accrued coupons on Eurobonds monthly starting May 31 during the standstill period. Unpaid coupons will be capitalised, but will not bear interest. DTEK may repay more overdue interest to bondholders and debtors if its end-month cash balance exceeds $110mn, the Concorde Capital brokerage in Kyiv wrote in a note on April 11.

The move will allow DTEK to secure the long-term debt restructuring it has already provided to banking creditors and representatives of an ad hoc bondholder committee. Earlier, the holding missed two coupon payments on its Eurobonds worth about $37.8mn.

"Based on the possible restructuring parameters that DTEK mentioned, and given that the holding's fundamentals are improving this year, we estimate the net present value (NPV) of cash flows of payments on bonds to be least 45 cents per dollar of par value (assuming a 16% discount rate)," Alexander Paraschiy at the Concorde Capital brokerage in Kyiv wrote.

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