The latest debt restructuring proposal from Ukraine’s state-run oil and gas company, NJSC Naftogaz Ukrainy, faces opposition from a group that rejected previous plans to defer principal and interest payments on $835 million of already-defaulted debt.
(Bloomberg) — The latest debt restructuring proposal from Ukraine’s state-run oil and gas company, NJSC Naftogaz Ukrainy, faces opposition from a group that rejected previous plans to defer principal and interest payments on $835 million of already-defaulted debt.
A group of creditors advised by Cleary Gottlieb Steen & Hamilton LLP disagrees with Naftogaz’s restructuring proposal because it believes the company is able to make the payments, according to a person familiar with the matter, who asked not to be identified discussing private information. The group has enough sway to prevent Naftogaz from getting the support of 75% of creditors that’s necessary to approve a restructuring, the person said.
Ukraine’s government had its biggest energy company request a two-year debt freeze and effectively blocked it from making payments to bondholders to save cash for gas purchases after Russia’s invasion upended the economy. Naftogaz defaulted on its 2022 and 2026 notes last year after failing to gather enough backing from bondholders for a delay, while reaching an agreement to restructure its 2024 notes.
The group of creditors had presented its own “good-faith” plan that takes into consideration Naftogaz’s financial condition “as well as legitimate concerns regarding its need to fully support Ukraine’s economy and its critical infrastructure,” according to an emailed statement sent by the law firm on Monday. The creditors hold the 2022 and 2026 bonds, as well as the notes originally due in 2024.
While a pushback by the group could delay the remedying of the defaults, creditors have not started a process to accelerate payments or seize assets.
Naftogaz referred a request for comment to Lazard Frères SAS, which the company hired to help with debt restructuring. A spokeswoman for Lazard declined to comment.
–With assistance from Daryna Krasnolutska.
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