TRLPC-Lenders to Ukraine await sovereign debt restructuring
By Sandrine Bradley
LONDON, March 30 (Reuters) - International banks are waiting for the outcome of Ukraine's sovereign debt restructuring before embarking on billions of dollars of corporate financial restructuring in the war-torn region.
More than $5.2 billion of corporate debt in the form of international syndicated loans, pre-export financings and project finance deals is due to mature in the next three years, according to Thomson Reuters LPC data.
All but a handful of these loans have been passed into the hands of the banks' work out or restructuring teams as Ukraine's political situation continues to wreak havoc with its economy.
"There are only a small handful of Ukrainian clients who are not already in default or heading that way," a loan banker said.
On March 24, Ukraine's largest power and coal producer, Donbass Fuel Energy Co Holding (DTEK), met with all of its bank lenders to discuss restructuring its loans, banking sources said.
The company has not entered a formal restructuring process and a coordinating committee of lenders has not been formed.
DTEK has had monthly waivers since November 2014 to prevent it defaulting on its loans. Talks have started to restructure the group's debt with reduced repayments and maturity extensions across the company's loan portfolio.
"DTEK is looking to 'reprofile' its debt. The discussions were based around pushing out maturities in conjunction with a guarantee that it will repay at least 10 percent of the maturing debt," one banker close to the talks said.
DTEK has an outstanding $375 million syndicated loan comprising a $152.5 million term loan that matures in August 2016 and a $225 million term loan that matures in 2018, according to LPC data.
It also has an outstanding 416 million euro ($450.74 million) facility signed in October 2012 that comprises a 135 million euro term loan which matures in October and a 281 million euro term loan that matures in October 2017.
On March 25, DTEK said that it had moved its main office and the centre of main interest from the Netherlands to England and Wales, which would allow it to use a UK scheme of arrangement to push through any debt restructuring agreements. Under the scheme it would only need 75 percent of creditor approval.
Financial advisory mandates could soon be coming for DTEK, restructuring advisors said, which indicate that the company could be heading towards a more formal debt restructuring.
"There have been some beauty parades by Ukrainian companies looking for financial advisers and a couple have already engaged them; we expect DTEK to come," one London-based restructuring adviser said.
METINVEST IN TALKS
Ukrainian steel and mining group Metinvest is also talking to lenders about potentially reorganising secured pre-export loans, bankers said.
The group's pre-export loans include a $300 million five-year deal signed in November 2013 and a $560 million three-year deal signed in April 2013.
Talks are focussing on a waiver for a $1.2 billion five-year loan that Metinvest signed in November 2011, which will be part of a more comprehensive reorganisation of all the group's debt, bankers said in February.
Banks on the $1.2 billion deal include Deutsche Bank, ING, Natixis, Portigon, UniCredit, Erste, BNP Paribas, Bank of Tokyo-Mitsubishi UFJ, Raiffeisen Bank International, Rabobank and Credit Suisse.
Bankers do not expect a solution for Metinvest to be agreed in the near future.
"Metinvest will be a long and complex process," said a second loans banker.
Renewed talks between lenders and pipe and wheel company Interpipe have also stalled, a third banker said. Interpipe has an outstanding $344 million term loan that matures in November 2018.
DTEK, Metinvest and Interpipe did not respond to requests for comment.
SOVEREIGN WAIT
The situation between lenders and Ukranian companies is further complicated by banks' need for clarity about the ongoing negotations to restructure Ukraine's sovereign debt.
"Until there is more clarity on the sovereign debt situation and the political situation in general, banks are just hunkering down and companies are simply not making any payments," said one London-based restructuring lawyer.
Ukraine's government has made it clear that it wants its sovereign debt to be written down, which could bring losses for international creditors forced to take 'haircuts' on existing Ukrainian exposure.
If Ukraine's sovereign debt is written down, loans for state-backed companies could face similar writedowns. Creditors to private Ukrainian companies are less willing to take provisions and are expected to push for milder amendments and extensions to the existing loans.
"If the (Ukraine's) debt is rescheduled over 15 years with a reduced margin or changed repayment profile, that will also be applied to all state-backed corporates," a Ukraine-based lawyer said.
"But the government is trying to ensure that there will be haircuts." he added.
Whatever the outcome, a quick solution to Ukraine's corporate debt situation is unlikely, bankers said.
($1 = 0.9229 euros) (Editing by Christopher Mangham and Tessa Walsh)
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