Naftogaz Ukrainy

Naftogaz held yesterday a conference call with holders of its bonds, presenting a third update of its restructuring proposals for the 2022 and 2026 issues. For holders of the $335m bond that fell due on Jul. 19, 2022, Naftogaz offered to pay 5% of the principal ($16.8m) after its proposal was accepted (implementation date) and defer the remaining amount to 2024 and 2025. Half of the remaining principal would to be paid on Jul. 19, 2024, and the half, on Jul. 19, 2025. In addition, Naftogaz offered to pay interest accrued until the implementation date along with additional interest on that amount. Following the implementation date, coupons would be accrued at an increased rate of 7.650% (vs. 7.375% originally) and deferred until the new maturity date along with interest on interest. The company may decide to pay deferred and additional interest in part or in full at any time or capitalize it. However, the semiannual coupon accruing from Jan. 19, 2024. to Jul. 19, 2024, would be payable in cash.

Naftogaz reported 9M22 revenues of $5.1bn (+5.1% y-o-y), EBITDA of $85m (down from $1.4bn in 9M21), and net loss of $2.1bn (vs. $159m loss in 9M21). Net operating cash flow was negative at $461m (vs. -$706m in 9M21), including $398m of additional working capital. Net investment cash flow stood at +$159m (vs. -$229m in 9M21), reflecting $344m of income from the gas transmission system operator, and financing cash flow was positive at $182m (vs. -$113m in 9M21). Naftogaz paid $129m of dividends to the state and reported $415m of net proceeds from new borrowings (vs. net repayment of $24m in 9M21). Total debt was little-changed at $2.5bn, with cash up 3.7x to $837m (-25% YTD) and net debt down 24% to $1.6bn.