DTEK to pay coupons fully in cash in 2018, adds coal machinery assets

DTEK Energy (DTEKUA) announced on Dec. 1 it acquired controlling
stakes in three Ukrainian coal machinery companies on Nov. 30. The new assets
include Druzhkivka Plant, Svitlo Shakhtaria Plant and the Mining Machines
engineering center, all being a part of the SCM business group, the parent
company for DTEK Energy.

On top of that, the holding announced it will pay
“full interest in cash to all of its bond creditors in the first quarter of
2018.” Based on the terms of DTEKUA Eurobonds, the holding may choose to pay
coupons (10.75% rate) in cash (at least 5.50%) and in PIK (the rest) in
2017-2018.

Alexander Paraschiy: The
consolidation of coal machinery assets under DTEK Energy is surprising news,
given that over the last couple of years, the sub-holding was only spinning off
assets (its natural gas production unit, green energy unit, Russia-based coal
mine). So far, it is hard to say whether the consolidation of coal machinery
assets is value-creative for DTEK Energy.

At the same time, DTEK’s decision to pay coupons fully
in cash next time is encouraging – it clearly indicates the company is better
off, which is supportive for further growth of the DTEKUA bond price.