DTEK to exchange all its 2015 notes into 20% cash and new notes
24 April 2015
Ukraine’s leading energy holding DTEK (DTEKUA) has received exchange instructions from holders of 91.1% of its 2015 notes which mature in one week, according to its report of April 23. This was just a minor increase of acceptance level compared to April 8 (88.6% of note holders agreed on that date).
This number of votes is not enough for DTEK to pursue a voluntarily exchange of the existing Eurobond into cash and new bonds. This is because DTEK has set an exceptionally high minimum acceptance level for such a scenario: 98%. But such an acceptance rate is more than enough for DTEK to initiate a compulsory exchange of old notes for all holders. To use this scenario, DTEK needed minimum acceptance rate of 75%.
This means that after completing all the bureaucratic procedures, DTEK will exchange all its USD 200 notes maturing on April 28, 2015 into 20% cash and 80% of new notes. The new notes will have a coupon rate of 10.375% (up from 9.50% for existing notes) and are scheduled to be repaid in two equal installments in September 2017 and March 2018. On top of that, the bond holders which agreed on the exchange before the early exchange deadline (April 13) will receive 3% in early instruction fee.
DTEK also reported that its affiliates are holding USD 24.5 mln in existing notes as of the reporting date (up from USD 19.0 mln as of Mar. 23).
Alexander Paraschiy: After DTEK increased the minimum acceptance level for voluntary exchange to 98% in April 1, it became clear that the holding is willing to force all holders to do the exchange. Therefore, there are no surprises in DTEK’s recent report. As soon as all the formal procedures are done (the holding still needs to get a court decision on April 27 to force all holders to exchange), DTEK will issue up to USD 160 mln in new notes in exchange for the old ones. The exchange should be made on April 28. The total cash that DTEK will pay to external holders of existing notes would be about USD 39.9 mln, including about USD 4.8 mln in early instruction fees.
