Ukraine receives votes required for restructuring Eurobonds - Finance Ministry

MOSCOW. Aug 29 (Interfax) - Ukraine and Ukravtodor have received the required votes from the holders of their Eurobonds worth around $23 billion for their restructuring on terms previously agreed with the creditors' committee, Ukrainian media reported, citing the Ukrainian Finance Ministry as saying in a statement on the London Stock Exchange.

"Overall, Ukraine and Ukravtodor have received and accepted participation instructions in excess of 97.38% of the combined principal amount of outstanding existing bonds with participation levels for the series of existing bonds ranging from 95% to 98.87%," the statement said.

The written resolutions with respect to each series of existing bonds were duly adopted, and the mandatory exchange of existing bonds of each series for new securities was approved.

The bonds in euro will be exchanged for new dollar-denominated Eurobonds at the rate of 0.8959 euros/$1, it said.

The Finance Ministry expects the settlements to take place on August 30, as anticipated.

For existing bonds of those holders who did not participate in the invitation, trading in them will be halted in the clearing systems on August 28, 2024 for the mandatory exchange to take effect.

"Ukraine and Ukravtodor plan to publish a separate announcement confirming the aggregate principal amount of the new securities to be delivered by Ukraine on the settlement date," it said.

As reported, Ukraine said on July 22 that it had reached agreements in principle on debt restructuring for Eurobonds worth around $23 billion with an ad hoc committee of holders of these Eurobonds. The agreements imply writing off 37% of the debt with the option of restoring 12% if a certain level of GDP is reached in 2028. The remaining debt will be issued in new Eurobonds maturing in 2029-2036, with interest gradually rising from 1.75% in the coming years to 7.75% at maturity. For voluntary participation in such exchange, a reward of 1.25% of the amount of the Eurobonds to be exchanged will be paid.

To make the deal take place, the consent of two-thirds of the holders of all securities and at least half of the holders of each issue was enough, provided that less than a quarter of the holders of each issue would be opposed to such an agreement.

According to the announcements, new dollar bonds are being issued in two parts to replace the existing bonds. Part A in four series maturing on February 1 in 2029, 2034, 2035 and 2036, respectively, and Part B also in four series maturing on February 1 in 2030, 2034, 2035 and 2036, respectively.

Part B bonds will be distributed in equal proportion to all holders of existing Eurobonds who voluntarily agree to the exchange, in the following ratio: 2.185% of existing bonds maturing in 2030, 8.165% in 2034, 6.9% in 2035 and 5.75% in 2036, with a total of 23%. If the voluntary exchange is rejected, however, the holders of the existing bonds will not receive the Part B bonds maturing in 2035-2036.

As for Part A bonds, their distribution depends on the maturity of existing bonds: the closer it is, the more the holder will receive new bonds with a shorter maturity, but in total they will account for 40% of the amount of existing bonds.

In particular, Part A Eurobonds maturing in 2024 will be exchanged for 28% of Eurobonds maturing in 2029 and 12% of Eurobonds maturing in 2034, while Eurobonds 2025 will be exchanged for 24% of Eurobonds A maturing in 2029 and 16% of Eurobonds maturing in 2034.

The "longest" existing Eurobonds maturing in 2035 will be replaced by 6% of Eurobonds A maturing in 2034, 14% of Eurobonds A maturing in 2035 and 20% of Eurobonds A maturing in 2036.

Earlier, the Finance Ministry said that in total A bonds maturing in 2029 will be issued for 12.5% of the total A bonds, 32.5% in 2034, 30% in 2035 and 25% in 2036.

As for the B bonds, the arrangements called for them to be issued at 9.5% of the total B bonds in 2030, 35.5% in 2034, 30% in 2035 and 25% in 2036.

The coupon payment rate of the A bonds: 1.75% in 2024-2025, 4.5% in 2026 through the first half of 2027, 6% in the second half of 2027-2033, and 7.75% beginning in 2034 and beyond.

B bond coupon payments: none until the second half of 2027, thereafter paid at 3% from the second half of 2027 to 2033 and 7.75% from 2034 and beyond. Ukraine initially expected to be able to complete all negotiations with the bondholders by August 1, when the Eurobonds mature under the terms of the 2022 restructuring. However, as of August 1, the government temporarily imposed a moratorium on Eurobond payments for the restructuring period.