NOT FOR DISTRIBUTION IN ANY JURISDICTION IN
WHICH SUCH DISTRIBUTION WOULD BE PROHIBITED BY APPLICABLE
LAW.
22 July
2024
Press
Release - For Immediate Release
Ukraine reaches agreement in principle with Ad
Hoc Creditor Committee on Debt Restructuring Terms
Kyiv,
Ukraine: The Government of Ukraine
("Ukraine"), advised by
Rothschild & Co and White & Case LLP as financial and legal
advisors, respectively, is pleased to announce that following
private discussions between July 12 and July 19 2024 with members
of the ad hoc creditor committee (the "Committee"), advised by PJT Partners
Limited and Weil, Gotshal & Manges
(London) LLP, it has reached agreement in
principle with the Committee on the key financial and non-financial
terms of a proposed restructuring transaction (the "Restructuring") in relation to
Ukraine's thirteen series of outstanding Eurobonds (the
"Eurobonds") listed in
Annex A. Ukraine also discussed the
agreement in principle reached with the Committee with a limited
number of additional investors (the "Investors") who indicated their
support. The Committee and the Investors
consist of a number of major institutional asset managers and other
long-term investors in Ukraine representing around 25% of the
outstanding amount of Ukraine's Eurobonds.
The agreement has been confirmed by
the IMF staff as compatible with the debt sustainability objectives
of Ukraine's Extended Fund Facility ("EFF"), under the baseline macroeconomic
framework of the fourth review dated 28 June 2024, taking into
consideration the authorities' overall restructuring strategy. The
agreement has also been endorsed by the Group of Creditors of
Ukraine.
The financial and non-financial
terms of the agreement in principle are detailed in Annex B and
Annex C, respectively.
Ukraine intends to launch the
Restructuring as soon as practicable, which will be implemented
through an exchange offer and consent solicitation, whereby each
series of Eurobonds will be exchanged for a package of new bonds
consisting of one or more of A Bonds and B Bonds, as further
detailed in Annex B and Annex C.
Ukraine intends to also restructure
the outstanding eurobonds issued by the State Agency for
Restoration and Development of Infrastructure ("Ukravtodor" and the
"Ukravtodor Eurobonds"), also
listed in Annex A. The restructuring of the Ukravtodor Eurobonds
will be on the same terms as the Restructuring.
************************
This announcement
is made by the Government and constitutes a public disclosure of
inside information under Regulation (EU) 596/2014 (16 April
2014).
Annex A
Eurobonds
|
Instrument
|
Coupon
|
Maturity
|
|
USD 912 m
7.75% notes
|
7.75%
|
Sep-24
|
|
USD
1.355bn 7.75% notes
|
7.75%
|
Sep-25
|
|
USD 750m
8.994% notes
|
8.994%
|
Feb-26
|
|
USD
1.34bn 7.75% notes
|
7.75%
|
Sep-26
|
|
USD
1.33bn 7.75% notes
|
7.75%
|
Sep-27
|
|
EUR 1bn
6.75% notes
|
6.75%
|
Jun-28
|
|
USD
1.32bn 7.75% notes
|
7.75%
|
Sep-28
|
|
USD
1.31bn 7.75% notes
|
7.75%
|
Sep-29
|
|
USD 1.6bn
9.75% notes
|
9.75%
|
Nov-30
|
|
USD
1.75bn 6.876% notes
|
6.876%
|
May-31
|
|
EUR
1.25bn 4.375% notes
|
4.375%
|
Jan-32
|
|
USD 3bn
7.375% notes
|
7.375%
|
Sep-34
|
|
USD 2.6bn
7.253% notes
|
7.253%
|
Mar-35
|
State Agency for Restoration and Development
of Infrastructure ("Ukravtodor") Eurobonds
|
USD 700m
6.25% notes
|
6.25%
|
2030
|
Annex B
Principal Financial
Terms
(applicable to the Eurobonds and the
Ukravtodor Eurobonds)
|
Consent
Fee
|
Only those bondholders who tender their Eurobonds in
the exchange offer on or before the early consent deadline shall be
entitled to receive the Consent Fee. Early Consent Deadline to be
agreed.
Consent fee shall be calculated as 1.25% of the
outstanding principal amount of Eurobonds calculated on a per note
basis of Eurobonds that are exchanged. Shall be payable to eligible
bondholders in cash in USD[1] on the date of
the settlement of the exchange.
|
|
Bond A
|
·
Principal: 40% of outstanding
principal amount of Eurobonds plus past due and accrued interest up
to 1 August 2024 ("Aggregate Bond
A")
·
Currency:
USD1
·
Coupon
Structure:
o Coupons to start
accruing from 1 August 2024 and to be paid in cash semi-annually in
arrears on 1 February and 1 August
o Payment dates on or
before 1 August 2025: 1.75% p.a.
o Payment dates from 1
February 2026 to 1 February 2027: 4.5% p.a.
o Payment dates from 1
August 2027 to 1 August 2033: 6% p.a.
o Payment dates from 1
February 2034 onwards: 7.75% p.a.
Bond A series as a percentage of Aggregate Bond
A
·
Series due 1 February 2029 : 12.5%
·
Series due 1 February 2034: 32.5%
·
Series due 1 February 2035: 30%
·
Series due 1 February 2036: 25%
|
|
Bond B
|
·
Principal: 23% of outstanding
principal amount of Eurobonds plus past due and accrued interest up
to and including 1 August 2024 ("Aggregate Bond B")
·
Currency:
USD1
·
Coupon Structure:
o Coupons to start
accruing from 1 August 2024 and to be paid in cash semi-annually in
arrears on 1 February and 1 August
o Payment dates on or
before 1 February 2027: nil
o Payment dates from 1
August 2027 to 1 August 2033: 3%
o Payment dates from 1
February 2034 onwards: 7.75%
Bond B Series as a percentage of Aggregate Bond
B
·
Series due 1 February 2030: 9.5%
·
Series due 1 February 2034: 35.5%
·
Series due 1 February 2035: 30%
·
Series due 1 February 2036: 25%
Non-consenting holders would not
receive series 2035 and 2036, and unissued additional Bond Bs would
not be reallocated to consenting holders
|
|
Contingent Bonds
B
|
·
Additional Bond B principal (2035 and 2036 series above) to be
issued by Ukraine as set out below on the Principal Increase Date
if the Principal Increase Condition has been met.
·
Principal Increase Date: 15
November 2029
·
Principal Increase
Condition: FY 2028 nominal GDP is at least 3% above FY 2028
nominal GDP projected by the IMF under the Baseline Scenario under
the Fourth Review of the extended arrangement under the Extended
Fund Facility for Ukraine dated 28 June 2024, AND, FY 2028 real GDP
is at least equal to FY 2028 real GDP projected by the IMF under
the Baseline Scenario under the Fourth Review of the extended
arrangement under the Extended Fund Facility for Ukraine dated 28
June 2024
·
Principal Increase
Amount:
o Up to an additional
12% of outstanding principal amount of Eurobonds plus past due and
accrued interest up to 1 August 2024 to be issued as additional
Bond B
o Maximum issuance of
the full 12% under scenarios where FY 2028 nominal GDP outperforms
IMF Baseline by 7.5% or more (in the scenario where 2028 UAH/USD FX
rate materializes as forecasted by the IMF under the Baseline
Scenario under the Fourth Review of the extended arrangement under
the Extended Fund Facility for Ukraine dated 28 June 2024)
·
Principal Increase Amount
calculation:
(2028A nominal GDP in UAH - 2028 Projected Nominal GDP in UAH *
1.03) * 27.87% / Average 2028 UAH /USD FX rate
· Source :
IMF October 2029 World Economic Outlook
|
Annex C
Principal Non-Financial Terms
|
Structure of Transaction and Allocation of New
Securities
|
The debt restructuring will be consummated through an
exchange offer (and associated consent solicitation) (the
"Transaction") open to all
eligible holders of Eurobonds. Ukraine will offer to exchange the
Eurobonds for four series of A Bonds and four series of B
Bonds.
At settlement, participating holders of Eurobonds
will receive an allocation of the various series of A Bonds and B
Bonds pursuant to a schedule designed to recognise the different
maturities and coupon levels across the Eurobonds.
|
|
Documentation and Implementation
|
Ukraine will consult with the Committee and its
advisors on the documentation necessary to facilitate the
Transaction, including the exchange offer and consent solicitation
memorandum and the terms and conditions of the A Bonds and B
Bonds.
The terms and structure of the Transaction and of the
related documentation will be designed to encourage the
participation and consent of holders of Eurobonds through use of
collective action clauses and inclusion of appropriate
incentives.
Appropriate information undertakings by Ukraine and
bondholder remedies/protections to support contingent features in
the B Bonds to be included in the definitive documentation.
|
|
Loss Reinstatement
|
In the event a further restructuring of A Bonds and B
Bonds is required at the time of a restructuring of Ukraine's
official sector claims (as anticipated by the current IMF
programme) by reason of the application of comparability of
treatment considerations, loss reinstatement provisions embedded in
the terms of the A Bonds and B Bonds shall have the commercial
effect of reinstating the original (pre-2022 restructuring) claim
of bondholders plus accrued and unpaid interest thereon up to the
date of the further debt treatment less the aggregate amount of
interest paid on the A Bonds and B Bonds up to the date of the
further restructuring.
Exchange documentation to include a description of
commitment of the Group of Creditors of Ukraine ("GCU") to provide future debt relief to
Ukraine to ensure debt sustainability, as well as the GCU's
approach to comparability of treatment in case a further
restructuring of A Bonds and B Bonds is required.
|
|
Most Favoured Creditor Clause
|
Documentation of A Bonds and B Bonds to include a
market standard most favoured creditor clause. Terms to be
agreed.
|
|
Treatment of Warrants
|
With respect to Ukraine's outstanding GDP-linked
Securities ("Warrants"):
a. Ukraine intends to make the payment of
the deferred consent fee which formed part of the 2022 consent
solicitation in relation to the Warrants and the deferred 2021
reference payment.
b. Ukraine will commit to ensure the fair
and equitable treatment of holders of the Warrants in any
prospective future liability management or other treatment proposal
contemplated in the context of the IMF programme.
c. The A Bonds and B Bonds will have no
events of default related to or referencing the Warrants.
|
|
Ad Hoc Creditor Committee adviser's
fees
|
The exchange documentation will provide a mechanism
for payment or reimbursement of all reasonable fees, costs and
expenses (including advisor fees and expenses) of the Committee on
mutually satisfactory terms and in line with market standard by way
of allocation of budgeted but unpaid consent fees, deduction of
such fees from the first coupon payment on the A Bonds or
otherwise.
|
***
This press release does not constitute an offer of the new
securities for sale in the United States, and the new securities
(if issued) will not be registered under the U.S. Securities Act of
1933, as amended (the "Securities
Act") or the securities laws of any state of the United
States and they may not be offered or sold within the United
States, except pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act
and applicable state or local securities laws. This press release
does not constitute an offer of the new securities for sale, or the
solicitation of an offer to buy any securities, in any state or
other jurisdiction in which any offer, solicitation or sale (if
made) would be unlawful. Any person considering making an
investment decision relating to any securities must inform itself
independently based solely on an offering memorandum to be provided
to eligible investors in the future in connection with any such
securities before taking any such investment
decision.
This announcement is directed only to beneficial owners of the
Eurobonds who are (A) "qualified institutional buyers" within the
meaning of Rule 144A under the Securities Act or (B) outside the
United States in offshore transactions in compliance with
Regulation S under the Securities Act, that may lawfully
participate in the Transaction in compliance with applicable laws
of applicable jurisdictions.
No
offer of any kind is being made to any beneficial owner of
Eurobonds who does not meet the above criteria or any other
beneficial owner located in a jurisdiction where the offer would
not be permitted by law.
Forward-Looking
Statements
All statements in this press release, other than statements of
historical fact, are forward-looking statements. These statements
are based on expectations and assumptions on the date of this press
release and are subject to numerous risks and uncertainties which
could cause actual results to differ materially from those
described in the forward-looking statements. Risks and
uncertainties include, but are not limited to, market conditions
and factors over which Ukraine has no control. Ukraine assumes no
obligation to update these forward-looking statements and does not
intend to do so, unless otherwise required by
law.
Notice to
Investors in the European Economic Area and the United
Kingdom
Notice to EEA
retail investors. The announcement contained
in this press release is not being directed to any retail investors
in the European Economic Area ("EEA") or in the United Kingdom.
As a result, no "offer" of new securities is being made to retail
investors in the EEA or in the United Kingdom.
This announcement is only directed to beneficial owners of
Eurobonds who are (i) within a Member State of the European
Economic Area if they are "qualified investors" as defined in
Regulation (EU) 2017/1129 and (ii) within the United Kingdom they
are "qualified investors" as defined in Regulation (EU) 2017/1129
as it forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018, as amended ("EUWA").
The new securities are not intended to be offered, sold or
otherwise made available to and should not be offered, sold or
otherwise made available to any retail investor in the EEA. For
these purposes, a "retail investor" means a person who is one (or
more) of: (i) a retail client as defined in point (11) of Article
4(1) of Directive 2014/65/EU (as amended, "MiFID II"); or (ii) a customer within
the meaning of Directive (EU) 2016/97 (as amended), where that
customer would not qualify as a professional client as defined in
point (10) of Article 4(1) of MiFID II.
The new securities are not intended to be offered, sold or
otherwise made available to and should not be offered, sold or
otherwise made available to any retail investor in the United
Kingdom. For these purposes, a "retail investor" means a person who
is one (or more) of: (i) a retail client as defined
in point (8) of Article 2 of Regulation (EU) No 2017/565 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018, as amended; and/or (ii) a customer within
the meaning of the provisions of the Financial Services and Markets
Act 2000 (the "FSMA") and
any rules or regulations made under the FSMA to implement Directive
(EU) 2016/97, where that customer would not qualify as a
professional client, as defined in point (8) of Article 2(1) of
Regulation (EU) No 600/2014 as it forms part of UK domestic law by
virtue of the EUWA.
Consequently no key information document required by
Regulation (EU) No 1286/2014 (as amended, the "EU PRIIPs Regulation") or by Regulation
(EU) No 1286/2014 as it forms part of UK domestic law by virtue of
the EUWA (as amended, the "UK
PRIIPS Regulation") for offering or selling the new
securities or otherwise making them available to retail investors
in the EEA or the United Kingdom has been prepared and therefore
offering or selling the new securities or otherwise making them
available to any retail investor in the EEA or the United Kingdom
may be unlawful under the EU PRIIPs Regulation and the UK PRIIPs
Regulation.
United
Kingdom
For the purposes of section 21 of the Financial Services and
Markets Act 2000, to the extent that this announcement constitutes
an invitation or inducement to engage in investment activity, such
communication falls within Article 34 of the Financial Services and
Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the
"Financial Promotion
Order"), being a non-real time communication communicated by
and relating only to controlled investments issued, or to be
issued, by Ukraine.
Other than with respect to distributions by Ukraine, this
announcement is for distribution only to persons who (i) are
outside the United Kingdom, (ii) have professional experience in
matters relating to investments falling within Article 19(5) of the
Financial Promotion Order, (iii) are persons falling within Article
49(2)(a) to (d) ("high net worth companies, unincorporated
associations etc.") of the Financial Promotion Order, or (iv) are
persons to whom an invitation or inducement to engage in investment
activity (within the meaning of section 21 of the Financial
Services and Markets Act 2000) in connection with the issue or sale
of any securities may otherwise lawfully be communicated or caused
to be communicated (all such persons together being referred to as
"relevant persons"). This
announcement is directed only at relevant persons and must not be
acted on or relied on by persons who are not relevant persons. Any
investment or investment activity to which the announcement relates
is available only to relevant persons and will be engaged in only
with relevant persons.