Ukrainian Railways in constructive dialogue with creditors, no consensus yet - CEO
MOSCOW. April 29 (Interfax) - Ukrainian Railways (Ukrzaliznytsia, UZ), which missed $45 million in interest payments on its 2026 and 2028 Eurobonds in January, is in constructive dialogue with creditors, although initial restricted talks in early April ended without a deal, Ukrainian media reported, quoting CEO Alexander Pertsovsky.
"We are in a constant dialogue. There are advisors, legal and financial advisors, who are communicating in an organized format at all times," Pertsovsky told the media.
Pertsovsky said that he could not disclose details of the dialogue. He said a consensus with note holders had not yet been reached.
As reported, in January 2025, UZ capitalized coupon payments deferred during the 2022 restructuring: $108.28 million for 8.25% 2026 notes and $51.9 million for 7.875% 2028 notes. This increased the outstanding volumes to $703.2 million and $351.9 million, respectively.
In January this year, the company declined to make $45 million in coupon payments due January 9 and January 15 and announced plans to begin a comprehensive restructuring of its financial obligations with the help of qualified financial and legal advisors.
The company cited a continued decline in cargo revenue amid an expected 17% volume drop in 2025 and intensified attacks on railway infrastructure as primary reasons for halting debt service.
According to a presentation, UZ revenue fell 15.6% in 2025 to $2.189 billion, and EBITDA dropped 30.2% to $293 million, of which $270 million was budget support. Net debt/EBITDA rose to 5.2x.
UZ held restricted talks with an ad hoc group of bondholders from April 1 to April 8, presenting a restructuring proposal that has yet to yield a result. The company is advised by Clifford Chance LLP, Sayenko Kharenko, Rothschild & Cie, and FinPoint LLC. The ad hoc group is advised by Hogan Lovells International LLP.
According to the proposal, UZ suggested a 20% principal haircut, extending the final maturity to June 2033, and starting soft amortization in December 2030 via six equal installments of $150 million.
The company also wants to tie these payments to cargo volumes. "Each individual $150 million payment can be adjusted up or down within a range of $112-168 million depending on cargo transportation volumes," the presentation said.
Proposed cash interest rates are 1.5% for the first year (June 2026-June 2027), 2% for the second, 4% for the third, 6% for the fourth, and 7.75% for the final three years.
Regarding overdue interest, which will reach $83 million by June 30, UZ proposed a 20% haircut, paying 20% of the remaining $67 million in cash (1.3 cents on the dollar) and capitalizing the rest into a new instrument.
If accepted, the company would pay just $20 million and $16 million in cash on Eurobonds this year and next, respectively, followed by $77 million in 2028, $121 million in 2029, $240 million in 2030, $389 million in 2031, $434 million in 2032, and $155 million in 2033.
