Naftogaz supervisory board fails to consider Vitrenko dismissal

The supervisory board of Naftogaz (NATFO) at its
meeting on June 24-25 did not consider a question to recommend the dismissal of
CEO Yuriy Vitrenko, Interfax-Ukraine reported on June 30 citing a statement
from the board. The board might consider Vitrenko’s dismissal at one of its
next meetings, the statement said. The board also urged the CEO to offer his
changes to Naftogaz’ strategy and organizational structure in the near future.
Vitrenko, in turn, assured the board that his offers would be ready by July 1,
epravda.com.ua news site reported. Recall, in mid-June, the head of Naftogaz
supervisory board, Clare Spottiswoode, initiated a board meeting to dismiss
Vitrenko just after the National Agency on Corruption Prevention found that
Vitrenko’s appointment violated anti-corruption legislation.
Later on, a local court suspended the Agency’s decision.

In other news, Vitrenko told Interfax-Ukraine that
Naftogaz might consider issuing a new Eurobond this autumn. He said that this
issue might be important for optimizing the company’s debt portfolio and
raising new funds for investments. Recall, Naftogaz made an unsuccessful
attempt to issue new dollar bonds and partially repurchase existing bonds in October. Its plans
to issue a new bond in spring 2021 also failed due to the scandalous reshuffling of the top management
in late April. The company’s nearest Eurobond for USD 335 mln matures in July
2022.

Alexander Paraschiy: As we concluded before, there is no political will in Ukraine to
dismiss Vitrenko. As such, the board seems to be making another step to find
common ground with Vitrenko, with whom they had a public confrontation. So far,
the conflict between the CEO and the head of the supervisory board did not
affect Naftogaz bond prices, leaving a good chance for the company to place a
new bond this autumn or next spring, in order to refinance (or buy back) the
next maturing bond. We remain neutral on NAFTO bonds.