DTEK Energy agreed on restructuring term sheet, welcomes bondholder participation

Ukraine’s leading coal and power holding, DTEK Energy
(DTEKUA), reported on March 26 that it has agreed on a term sheet for the
restructuring of “substantially all its indebtedness” with an ad hoc committee
of holders of its Eurobond and members of an ad hoc committee of bank lenders.
It reported it would shortly launch two inter-conditional schemes of
arrangement and that it welcomes bondholders to sign a lock-up agreement and
support the scheme. Such noteholders will receive a restructuring fee in cash,
equal to 2% of the principal amount of the new notes to be issued by DTEK
Energy, in case the scheme successfully passes a vote.

DTEK Energy provided few details on the restructuring
conditions this time, while in early February it reported
that it had agreed that the existing DTEKUA notes (and some DTEK Energy loans)
would be exchanged for the new company notes and USD 425 mln notes to be issued
by sister company DTEK Oil & Gas. The new DTEK Energy notes will mature at
the end of 2027 and will amortize by USD 10 mln semi-annually starting June
2022. They will have an interest rate of 5% by the end of January 2022, of
which no more than 3.5% can be paid in PIK. From January 2022, the coupon rate
is offered at 7%. The notes of DTEK Oil & Gas will mature at the end of
2026, will amortize by USD 50 mln p.a. starting late 2023, and will have a coupon
rate of 6.75%.

On Feb. 10, DTEK group’s CEO Maxim Timchenko revealed
his expectation that the restructuring of DTEK Energy’s debt would take three
months.

Alexander Paraschiy: Taking into
account that DTEKUA bond price is growing fast to our estimates of its minimum
fair value (83% of par), we conclude that the vast majority of bondholders are
ready to participate in the restructuring. Therefore, DTEK Energy is close to
meeting Timchenko’s expectations about the timing of the restructuring process.