Agreement has been reached between Naftogaz and the ad hoc committee of holders of the 2026 US$ 500M Eurobond on the terms of a consent solicitation to amend the terms of the Notes

Naftogaz (the “Company”) is pleased to announce terms of consent solicitations to be launched to amend the terms of the US$ 500M 7.625% Notes due 2026 (the “2026 Notes”) issued by Kondor Finance PLC.

The consent solicitation, which is expected to be completed by end of July 2023 includes, in particular:

  • the payment of a consent fee equal to 0.5% of the principal amount of the Notes to holders that vote in favour of the consent solicitation,
  • the deposit in a dedicated segregated reserve account of Naftogaz of (i) the equivalent of one interest payment on the 2026 Notes prior to the launch of the consent solicitation; and (ii) the equivalent of one interest payment on the 2026 Notes in three instalments commencing on 15 January 2024 and ending on 31 March 2024. Amounts in the reserve account are to be used solely for the payment of interest on the 2026 Notes that will resume in November 2024; and
  • the extension of the maturity date for the 2026 Notes so that 50% of the principal amount outstanding is redeemed in November 2027 and the remaining 50% in November 2028.

The terms of the consent solicitation to amend the 2026 Notes have been agreed with an ad hoc committee represented by Hogan Lovells LLP.

The agreement has been approved by the Executive Board and the Supervisory Board of Naftogaz and is subject to approval by the Cabinet of Ministers of Ukraine.

Oleksiy Chernyshov, CEO of Naftogaz, said:

I am delighted that an agreement has been found with the representatives of the 2026 Eurobond noteholders and thank them for constructive discussions. I call upon on all noteholders to support the forthcoming consent solicitation. I thank the government of Ukraine and our international partners, in particular the EBRD, for their continuous support. Proposed changes in covenants will also benefit the 2024 Notes which were extended last year to 2026. This agreement is another sign of Naftogaz’s intention to find common ground with its investors. We will – based on the successful implementation of the corporate governance reform - continue improving our financial transparency and our operations. We will strive to overcome the effects of the russian aggression while preparing a bright future for Naftogaz as a key building block of Ukraine’s development and as an important partner for the fulfilment of Europe’s energy needs.”

Lazard acts as exclusive financial adviser and Freshfields Bruckhaus Deringer and Aequo as legal advisers to Naftogaz.

Proposed Consent Solicitation terms in respect of the 2026 Notes


Notes Subject of the consent solicitation

  • US$500,000,000 7.625 per cent. Loan Participation Notes due 2026 issued by Kondor Finance plc (the “Issuer”) for the purpose of funding a loan to National Joint Stock Company “Naftogaz of Ukraine” (“Naftogaz” or, the “Company”) (the “2026 Notes”)





  • 2022 Notes” means the U.S.$335,000,000 7.375 per cent. Loan Participation Notes due 2022 issued by the Issuer for the purpose of funding a loan to Naftogaz (the “2022 Notes”)
  • 2024 Notes” means the EUR600,000,000 7.125 per cent. Loan Participation Notes originally due 2024 issued by the Issuer for the purpose of funding a loan to Naftogaz
  • Additional Interest” means interest (at the relevant contractual rate, including as amended pursuant to the Proposals) accruing on PDI from (and including) the relevant contractual due date to (but excluding) the date such PDI is paid
  • “Cash Payment Amount” means the sum of the Interest Payment Amount and the Initial Principal Payment in respect of the 2022 Notes
  • “CSM” means a consent solicitation memorandum that will be issued by the Issuer setting out the Proposals to the 2026 Noteholders
  • “Implementation Date” means the date prior to the Longstop Date that all conditions to implementation of the Proposals set-out in the CSM are satisfied, including but not limited to the Proposals relating to the payment of the Consent Fee (as defined below) and the deposit of the First Instalment (as defined below) into the Debt Service Reserve Fund (as defined below). If the conditions are not met prior to the Longstop Date, the Proposals shall not be implemented and any extraordinary resolutions adopted in respect of the Proposals shall be of no effect
  • “Longstop Date” means 30 September 2023
  • “PDI”, means interest not paid on the relevant contractual due date
  • “Proposals” means the proposals (of the transactions contemplated herein) put to the holders of the 2026 Notes (the “2026 Noteholders”) as they will be set out in the CSM

Principal deferral

  • Principal Deferral Period: defer the payment of outstanding principal until 8 November 2027 (50%) and 8 November 2028 (50%)





Interest deferral

  • The payment of PDI (8 November 2022, 8 May 2023) and interest otherwise due on 8 November 2023 and 8 May 2024 will be deferred until 8 November 2024 (the “2026 Deferral Period”)
  • Additional Interest will accrue on PDI (including interest payments that otherwise come due during the 2026 Deferral Period)
  • PDI and Additional Interest may, at the sole discretion of Naftogaz, be (i) repaid fully or in part at any time until the end of the 2026 Deferral Period, or (ii) be capitalized fully or in part at the end of the 2026 Deferral Period (net of PDIs and Additional Interest paid in part prior to such capitalization). Provided however, that interest that will accrue on the 2026 Notes from (and including) 8 May 2024 to (but excluding) 8 November 2024 shall be payable in cash

Debt service reserve Fund

  • Prior to the publication of the CSM, the Company shall set aside and maintain a debt service reserve account (with cash held by the Company in a segregated bank account with a bank in Ukraine) for the benefit of 2026 Noteholders (the “Debt Service Reserve Fund”):

- First instalment to be paid into the Debt Service Reserve Fund will be an amount equivalent to six (6) months’ interest debt service in respect of the 2026 Notes to be made at the end of the 2026 Deferral Period in USD (USD 19,062,500) (the “First Instalment”) which shall be paid as a condition to the occurrence of the Implementation Date;

- Later instalments to be paid into the Debt Service Reserve Fund on or before (i) 15 January 2024, in an amount equivalent to USD3,000,000, (ii) 15 February 2024, in an amount equivalent to USD3,000,000, and (iii) 31 March 2024, in an amount equivalent to USD13,062,500, with the result that following such final instalment an additional six (6) months’ interest debt service in respect of the 2026 Notes in USD will have been deposited, so that in total an amount equivalent to two semi- annual coupons will have been deposited in the Debt Service Reserve Fund (representing USD 38,125,000);

- Should Naftogaz not have sufficient USD to deposit the required amount into the Debt Service Reserve Fund or should Naftogaz be restricted from exchanging UAH to USD by applicable Ukrainian foreign currency regulations, an equivalent UAH amount (to the extent of the shortfall or applicable restriction) may be deposited (at the exchange rate applicable as of the date that the deposit is made); and

- Amounts in the Debt Service Reserve Fund to be solely used for the payment of interest due and payable on the 2026 Notes on or after 8 November 2024.

  • The Company and the Issuer undertake to promptly complete any formalities required to ensure the Debt Service Reserve Fund is solely used for the payment of interest due and payable to the 2026 Noteholders (and funds will not be withdrawn for any other purpose), provided that the bank accounts and balances thereon will not be subject to any security

Interest rate

  • 7.625% (initial contractual rate)

Consent fee

  • 0.5% paid to 2026 Noteholders who vote in favour of the Proposals (the “Consent Fee”), to be paid on the Implementation Date

Restructuring fee

  • Restructuring/amendment fee payable to the Issuer for further distribution at the instruction of the 2026 Noteholders who have agreed the Proposals with Naftogaz


Legal parameters

  • Debt Incurrence:

- Amend the debt incurrence covenant so that indebtedness incurred before 19 July 2024 is subject to a new test (which requires such indebtedness to (I) not exceed USD 500m in aggregate, and (II) mature after 8 November 2028), instead of the currently applicable consolidated leverage ratio test. From and including 19 July 2024, the consolidated leverage ratio test shall again apply. The following new exceptions will also be added:

  • a) new indebtedness from governments, IFIs and/or domestic state-owned banks, provided that it is used for damaged infrastructure repairs or other non- ordinary course activity resulting from military conflict, and was approved by the Supervisory Board of Naftogaz as applicable;
  • b) indebtedness required in order to comply with a requirement of martial law or indebtedness for the sole purpose of gas purchases; and
  • c) indebtedness of USD 413.2m equivalent incurred between 24 February 2022 and 31 December 2022.

- Where indebtedness is incurred under (a) or (b), Naftogaz will provide the details of the indebtedness incurred and use of proceeds on a quarterly basis

  • Dividend Payments: Suspension of dividend payment during the pendency of either Deferral Period, subject to exemptions for payment as required by applicable laws of Ukraine
  • Asset Sales: Amend the Limitation on Asset Sales covenant to allow proceeds from permitted asset sales to be used in relation to Note repayments / consent processes and to allow for the disposal of assets below their Fair Market Value if Naftogaz is required to dispose of such assets by mandatory requirements of applicable Ukrainian laws or regulations, provided that the transaction for disposal of the assets is approved by the Supervisory Board in accordance with the Company’s corporate governance procedures and an Officer’s Certificate signed by an authorized representative of the Company is delivered to the Trustee stating that: (i) the Supervisory Board has approved the transaction, and (ii) Naftogaz is legally required to consummate the asset sale



  • Stand-alone consent for the 2026 Notes. There will also be a separate consent for the 2022 Notes. Implementation of the Proposals for one series not inter-conditional on implementation of the other series






  • The Company will covenant that, subject to certain carve outs, no amendments which are more onerous for the Company and / or more favourable for Noteholders will be made to the terms of the 2022 Notes, the 2024 Notes or the 2026 Notes (including, but not limited to, the payment of fees, redemption of principal prior to stated maturity, payment of interest which is otherwise deferred, increasing interest rates and amendments to covenants). If any such amendments are required, equivalent amendments will be made to ensure other Noteholders are treated in an economically and legally equivalent manner. The carve outs to the MFN provision include the differences in approach contemplated in the Proposals and the separate proposals to the holders of the 2022 Notes


‘Fairness’ clause

  • ·If changes are made to the 2026 Notes covenants (including as contemplated herein), the holders of the 2022 Notes and the 2024 Notes will benefit from the changes to those covenants through compliance by Naftogaz with those more restrictive covenants


Arbitral award

  • To the extent that Naftogaz is permitted to do so at the time that it receives any payments pursuant to the arbitral award in the litigation against russia, Naftogaz will consider at such time the extent to which it is commercially appropriate to direct a portion of such payment towards the repayment of Noteholders and its other investors


This announcement does not constitute or form part of, and should not be construed as, an offer for sale or subscription of, or a solicitation of any offer to buy or subscribe for, any securities of the Issuer, Naftogaz or any other entity.

The terms of the proposal in this announcement are not binding on any party.

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