UK court allows DTEK to initiate scheme of arrangement

An English High Court agreed to convene DTEK’s proposed scheme of arrangement, Debtwire reported. The court hearing to initiate the scheme was scheduled for noon of April 8. Following this ruling, DTEK will offer all its bondholders to vote in favor of a standstill until Oct. 28. DTEK is asking its bondholders to send their voting instructions by April 22, offering a consideration payment equal to 0.25%. The bondholder meeting will be held on April 25 and the court hearing to approve its results is scheduled for April 26.

By October 28, DTEK intends to finalize a long-term restructuring of all its debt with banking creditors and bondholders, promising to treat them equally, the holding reported on April 8. DTEK also promises to seek no principal haircut, a maturity extension no longer than end-2023, and may seek to reduce its interest payments. It promises to offer some value recovery instruments in exchange for reduced interest, and come back to its pre-restructuring average interest as soon as “a majority of the restructured debt has been repaid.”

DTEK has scheduled a conference call for today, 4 p.m. London time, to answer investors’ questions regarding the restructuring process.

Alexander Paraschiy: Based on the possible restructuring parameters that DTEK mentioned, and given that the holding’s fundamentals are improving this year, we estimate the NPV of cash flows of payments on bonds to be least 45 cents per dollar of par value (assuming a 16% discount rate). Currently, DTEK’s Eurobonds trade at about 41 cents, which offers a good entry point, in our view.