Vodafone Ukraine agrees with holders of 49% of Eurobonds to defer repayment for 2 years at rising interest rate, 2% interest
MOSCOW. Jan 15 (Interfax) - Vodafone Ukraine, the country's second largest mobile operator, has offered the holders of its $399.88 million Eurobonds to defer their repayment for two years until February 11, 2027.
The company stands ready to partially repay $99.88 million along with accumulated interest, raise the coupon rate from 6.2% to 9.625% and pay 2% of the par value.
An ad hoc committee comprising the holders of 31% of the bonds and another bondholder, which hold 49% of all bonds in aggregate, have already endorsed these proposals, Ukrainian media reported, citing the company as saying in a statement on the Irish Stock Exchange on Tuesday.
"The National Bank of Ukraine's resolution, dated February 24, 2022, prohibits the borrower from repaying principal debt under a loan agreement using funds located within Ukraine. Although the borrower has been financing interest payments under the loan agreement using foreign currency reserves held outside Ukraine, these reserves have now been depleted. Additionally, the borrower does not generate foreign currency revenues and thus lacks sufficient reserves outside Ukraine to repay the loan by the maturity date," Vodafone Ukraine said in the statement, explaining the need for the postponement.
Since the beginning of the crisis, Vodafone Ukraine has invested UAH 12.66 billion, including UAH 5.66 billion in 2023, which is 58% more than in 2022, it also said.
The company posted a 13% increase in revenue to UAH 18.1 billion and a 6% rise in its operating profit to UAH 9.6 billion between January and September 2024, though net profit dropped, mainly due to currency fluctuations, by 23% to UAH 2.9 billion, it said. Its customer base grew 4.7% to UAH 15.9 million, while the average revenue per user (ARPU) rose 8.9% to UAH 122.4 per month.
As of September 30, 2024, Vodafone Ukraine held UAH 12.7 billion ($308 million) of free cash, cash equivalents and deposits (including government bonds) and had net debt of UAH 10.1 billion ($244 million). Free cash funds have shrunk to around $270 million to date, it said. The company has also entered into a credit facility with a Ukrainian bank under which it could obtain an additional $50 million in funding in Ukraine, but has not yet tapped it.
Vodafone Ukraine has accumulated $53.5 million in its offshore account with the support of its shareholder, and this amount could be increased by a $53.5 million loan from its shareholder, Telco Investment BV, it said.
"It is unlikely that the borrower will be able to accumulate additional funds outside Ukraine by the current bond repayment date (February 11, 2025) or before. Therefore, the borrower is unlikely to meet its repayment obligations unless the proposals are accepted," it said.
During the two-year deferral period, Vodafone Ukraine intends to accumulate sufficient funds outside Ukraine to enable it to fully repay the Eurobonds.
Applications to participate in the bid for the 2% interest will be accepted until 4 p.m. GMT on January 27, and the results are expected to be announced on February 5. Should a positive decision be made, the partial redemption will take place in three workdays and the interest will be paid in five workdays.
J.P. Morgan Securities plc is assisting the company with the transaction.
Vodafone Ukraine's Eurobonds are currently trading at 89% of par value on the Frankfurt Stock Exchange.
As reported, the company announced early in October 2024 that it had held talks with holders of its $400 million Eurobonds regarding restructuring. However, after approximately 31% of bondholders rejected the proposed terms, further negotiations were abandoned.
Negotiations on the restructuring of the five-year Eurobonds, issued in 2020 at a 6.2% annual rate for $500 million, with $100 million later repurchased, were held from September 19 to 30. Bondholders were offered the following terms: an extension of the maturity date by three years, an increase in the interest rate to 7.7%, a 1.5% compensation, the use of onshore cash reserves in Ukraine for repayment, and the introduction of a new provision for mandatory early repayment if capital control measures were eased.
On February 14, 2024, the Ukrainian government urged the NBU to allow major Ukrainian companies and holdings to sell foreign currency and transfer it abroad for Eurobond payments and settlements with Western creditors. Companies on the list included Vodafone Ukraine, Interpipe (a pipe and wheel holding), Metinvest (a mining and metallurgical holding), Kernel (an agricultural holding), and three DTEK holdings, namely, DTEK Energy, DTEK Renewables, and DTEK Oil and Gas.
However, the NBU did not meet these proposals. In May and July, currency restrictions were relaxed to facilitate servicing corporate Eurobonds, though repayment remains a challenge.
In August, Vodafone Ukraine paid $12.4 million in interest on its Eurobonds using funds from an onshore (Ukrainian) account, made possible by recent liberalization of currency controls permitting cross-border payments for debt servicing.
Since December 2019, Vodafone Ukraine has been part of NEQSOL Holding, a diversified group of companies operating in the energy, telecommunications, high-tech, and construction sectors.
