Cabinet Recognizes Naftogaz Board Work On Changes To Credit Conditions Of Eurobonds As Unsatisfactory

The Cabinet of Ministers has found the work of the board of the Naftogaz of Ukraine national joint-stock company on changes to the credit conditions of Eurobonds unsatisfactory.

This is stated in order No. 625 of July 21, Ukrainian News Agency reports.

"In connection with the unsatisfactory work of the board of Naftogaz, in particular, the non-conclusion of the transaction initiated by the board of the specified company, the consent to the commission of which was provided by the order of the Cabinet of Ministers of July 7, 2022., No. 554, oblige in accordance with Part 1 of Article 98 of the Civil Code the Board of Naftogaz to conclude a transaction with Kondor Finance plc on the terms attached to the original. To establish that before the conclusion of the above transaction, Naftogaz of Ukraine, in particular its officials and other authorized persons, are obliged to take any actions to perform the current main transaction with Kondor Finance after separate approval of such actions by the Cabinet of Ministers," the order says.

At the same time, the Cabinet of Ministers did not publish the specified terms of the transaction with Kondor Finance.

By order No. 554, the Cabinet of Ministers agreed to a transaction of the Naftogaz of Ukraine with Kondor Finance in excess of UAH 3 billion with respect to amendments to loan agreements.

As Ukrainian News Agency earlier reported, Fitch Ratings, an international credit rating agency, has downgraded National Joint Stock Company Naftogaz of Ukraine's Long-Term Issuer Default Rating (IDR) to 'C' from 'CCC' following its consent solicitation to defer its debt servicing of its Eurobonds, including that due on July 19, 2022.

In particular, the agency notes that Naftogaz asks to postpone payments of the principal and coupon on its bonds in the amount of USD 335 million, payable on July 19, 2022, until July 2024

In the context of this requirement and the weak liquidity of Naftogaz, Fitch believes that the consent request was conducted to avoid default.

In November 2019, Naftogaz placed seven-year Eurobonds worth USD 500 million at a rate of 7.625% per annum.

Also in July 2019, Naftogaz placed five-year Eurobonds for EUR 600 million at a rate of 7.125% per annum and three-year Eurobonds for USD 335 million at a rate of 7.375% per annum.

Kondor Finance is engaged in the issue of Eurobonds of Naftogaz.

Naftogaz of Ukraine is the leading company in Ukraine in terms of exploration and development of oil and gas deposits, drilling, transportation, and storage of crude oil and natural gas, and supply of natural gas to consumers.