Tue 07/26/2022 13:02 PM
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Release

Naftogaz confirmed that the company’s July 11 proposal for a two-year suspension of debt service on its three eurobonds has failed at a meeting of 2022 noteholders. The meetings for the 2024 and 2026 notes were not quorate and management has decided to not call adjourned meetings due to the creditor feedback received.

The state-owned energy group said it has still not received consent from the Cabinet of Ministers of Ukraine to pay principal and interest on the 2022 bonds and interest on the 2024s. As a consequence, Naftogaz has now defaulted due to its failure to pay on July 19 and failure to cure within the five-business-day grace period.

Naftogaz’s first attempt to secure debt payment relief for two years was launched on July 11 after the Ukrainian government ordered the company to seek the debt service suspension. The company is now going to amend its proposal to creditors and release details in due course.

Naftogaz’s eurobonds are still quoted at distressed levels, with the 7.375% 2022 notes at 29/34 and the 7.125% 2024 bonds and 2026 eurobonds at 19/24, according to Solve Advisors.

The group’s capital structure is below:
 
Naftogaz
 
12/31/2021
 
EBITDA Multiple
(UAH in Billions)
Amount
Price
Mkt. Val.
US$ Amt.
US$ Mkt. Val.
Maturity
Rate
Yield
Book
Market
 
$335M SSNs due 2022 1
9.1
47.5
4.3
0.3
0.2
Jul-19-2022
7.375%
 
 
€600M SSNs due 2024 1
18.6
33.8
6.3
0.7
0.2
Jul-19-2024
7.125%
81.344%
 
$500M SSNs due 2026 1
13.7
31.7
4.3
0.5
0.2
Nov-08-2026
7.625%
48.393%
 
Bank Borrowings 1
19.1
 
19.1
0.7
0.7
 
 
 
 
Total Secured Debt
60.4
 
34.0
2.2
1.2
 
1.8x
1.0x
Total Debt
60.4
 
34.0
2.2
1.2
 
1.8x
1.0x
Less: Cash and Equivalents
(34.8)
 
(34.8)
(1.3)
(1.3)
 
Plus: Restricted Cash
4.3
 
4.3
0.2
0.2
 
Net Debt
29.9
 
3.5
1.1
0.1
 
0.9x
0.1x
Operating Metrics
US$ Amt.
LTM Revenue
219.0
8.0
 
LTM Reported EBITDA
33.7
1.2
 
 
Liquidity
Plus: Cash and Equivalents
34.8
1.3
 
Less: Restricted Cash
(4.3)
(0.2)
 
Total Liquidity
30.5
1.1
 
Credit Metrics
Gross Leverage
1.8x
 
Net Leverage
0.9x
 

Notes:
LTM reported EBITDA is as reported. Amount for USD bonds are converted to UAH based on USD/UAH rate of 27.3105 as of Dec. 31, 2021. Amount for EUR bonds are converted to UAH based on EUR/UAH rate of 30.9222 as of Dec. 31, 2021. Market data as of May 24, 2022.
1. Secured by the pledges of inventories, PP&E and proceeds from future sales totalling UAH 30.617B at Sept. 30, 2021.
US$ Translation: UAH/USD rate used for USD conversion is 27.31.
 
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