DTEK agrees on long-term debt restructuring with all creditors

Ukraine’s leading coal and power holding DTEK Energy (DTEKUA) has reached debt restructuring agreements with Eurobond holders and banking lenders, according to its media release on Dec. 22, as reported by Interfax-Ukraine. According to DTEK, the restructuring of Eurobonds was approved by 88.96% of the holders on Dec. 19 and was sanctioned by High Court of England and Wales on Dec. 21.

DTEK Energy expects to issue the new Eurobonds on Dec. 29. The new notes will substitute the old Eurobonds of DTEK (about USD 895 mln outstanding, plus accrued coupons) and some banking loans in the total amount of no more than USD 300 mln.

As DTEK earlier announced, the new notes will have a 10.75% coupon rate, with the coupons payable quarterly in cash and PIK. The minimum cash amount to be paid will be: 5.5% in 2017 and 2018, 6.5% in 2019, 7.5% in 2020, 8.5% in 2021, 9.5% in 2022 and 2023 and 10.75% in 2024. The unpaid amount will be capitalized quarterly, paying interest. DTEK Energy is planning to repay 50% of the bonds outstanding (including the capitalized amount) on Dec. 29, 2023, and the rest on Dec. 31, 2024.

Alexander Paraschiy: Even though this is an expected event, it should trigger higher demand for DTEKUA bond prices, in our view. The factors that should add popularity to DTEK’s new bond will be its higher liquidity and a better credit rating as compared to its existing notes.