Recent Developments Regarding Ukrenergo Bondholders' Concerns

Key Developments Surrounding Ukrenergo's Bondholders

The recent situation with the Private Joint Stock Company "National Power Company Ukrenergo" regarding the US$825,000,000 6.875% Guaranteed Sustainability-Linked Green Notes due 2026 has raised significant concern among its stakeholders and financial partners. The bondholders, represented by a notable group known as the Ad Hoc Group, are currently addressing critical issues stemming from the company's recent announcements.

Payment Suspension Issues

The company announced that it would suspend payments on the Notes, including an interest payment that was scheduled for November. This sudden decision has sparked debates among bondholders, especially considering the previously communicated intentions of the Government of Ukraine to engage with them following the country's sovereign debt restructuring efforts.

Concerns from Bondholders

Despite assurances from the Government of Ukraine regarding discussions with bondholders, no such meetings occurred. The Ad Hoc Group has expressed its readiness to negotiate, yet there has been no reciprocation from either the government or the company. This lack of engagement has exacerbated feelings of uncertainty within the investor community.

Corporate Governance Challenges

One of the major issues raised by the Ad Hoc Group pertains to corporate governance within Ukrenergo. The government’s involvement in decision-making processes, especially regarding payment suspensions, raises questions about the company's management and supervisory structures. Sound corporate governance dictates that such decisions should be made solely by the company's leadership, free from external influence.

Implications of Payment Deferral

Since a prior debt deferral in 2022, the bondholders have already made significant concessions, and the company has not made any payments on the Notes since then. This situation has unfortunately created a conflicting scenario where, despite struggling with the Notes, Ukrenergo has continued to fulfill its obligations to other creditors. For example, it has serviced over $221 million and $156 million respectively in interest and principal to other commercial debts during the same timeframe.

Future Outlook for Stakeholders

While the Ad Hoc Group appreciates the company's interest in future engagement, it cannot view the recent payment suspension as an effective means to facilitate a constructive dialogue. The group has no option but to reserve its rights concerning any defaults that may arise from this situation, particularly regarding the interest payment due in November.

Support for Ukraine's Sovereignty

Despite the ongoing issues, the Ad Hoc Group remains committed to supporting Ukraine and its sovereignty amidst the ongoing conflict. They advocate that preserving strong commercial ties is imperative for fostering future capital market funding, which will ultimately benefit the Ukrainian economy.

Contact Information for Bondholders

Bondholders looking for further information can reach out to Alastair Goldrein or James Armshaw of Cleary Gottlieb Steen & Hamilton LLP. Their contact details are available, ensuring that stakeholders have access to knowledgeable representatives who can assist them.

Frequently Asked Questions

What are the key concerns regarding Ukrenergo bondholders?

The primary concerns involve the suspension of payments and corporate governance issues that affect decision-making processes.

What is the significance of the suspension of payments?

The suspension affects investor confidence and raises questions about the company's ability to meet its obligations while continuing to service other debts.

How have bondholders reacted to the announcement?

Bondholders are disappointed by the lack of communication regarding payment arrangements and are preparing to reserve their rights concerning potential defaults.

What role does the Government of Ukraine play in this situation?

The government is a guarantor for the bonds, but its involvement in corporate decisions has been criticized for undermining the company's governance.

Who can stakeholders contact for more information?

Stakeholders can contact Alastair Goldrein or James Armshaw of Cleary Gottlieb Steen & Hamilton LLP for additional details regarding their investments.

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