Ukraine’s leading coal and utility holding DTEK Energy, controlled by oligarch Rinat Akhmetov, has completed a long-term restructuring of its banking debt, the company said on March 29.
The concluded agreement amends the terms of the vast majority of the holding’s bank facilities, the company said, reporting no exact value of its debt to banks. However, the Concorde Capital brokerage in Kyiv estimated its value at about $1.0bn-1.1bn.
According to the deal, DTEK will repay $60mn of the debt in 2017, $40mn in 2018, $80mn in each of the years 2019-2022. It will fully repay the rest of debt by the end of June 2023. The interest rate on the new debt facility will be LIBOR/EURIBOR + 5%. DTEK will pay interest in cash and PIK, with the cash portion being 51% in 2017-2018, 60% in 2019, 70% in 2020, 79% in 2021 and 88% afterwards.
Legal firm CSM, which advised the creditors’ committee and the wider creditor group on the restructuring, hailed it as one of the largest restructurings to have taken place in the region.
“This complex transaction involved the composite restructuring of numerous previously unrelated facilities made available by a diverse lender group,” CMS said in a statement on March 31. “The CMS team advised on the English law restructuring, as well as providing advice and insight for the creditor group on the evolving situation in Ukraine, through its Kyiv office.”
Commenting on the transaction, CMS partner Mark Segall said: “This landmark restructuring was critical to the future of DTEK as one of Ukraine’s premier businesses, ensuring its continued ability to provide its customers with high-quality energy services while preserving the interests of its employees, shareholders and creditors. The project was particularly complex, involving support from a wide range of CMS offices and practice areas, and demonstrates the strength of our European offering and seamless cross-border delivery.”
Commented Concorde Capital analyst Alexander Paraschiy: “Based on such restructuring parameters, DTEK Energy will have to generate $150mn in free cash flow to be able to smoothly service all its debt this year. That would be a challenging task, in our view, but not impossible. Much will depend on DTEK limiting its CapEx appetites way below the cap of $475mn (let’s say, to $300mn) and its ability to ensure that the power sector regulator is approving a 'reasonably high' rate for electricity its power plant will produce.”
As the possibility of good power rates is high, Concorde remains neutral on DTEK Eurobonds, “with a certain degree of optimism”.
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