Agreement has been reached between Naftogaz and the ad hoc committee of holders of the 2022 US$ 335M Eurobond on the terms of a consent solicitation to amend the terms of the Notes

Naftogaz (the “Company”) is pleased to announce terms of a consent solicitation to be launched to amend the terms of the US$ 335M 7.375% Notes due 2022 (the “2022 Notes”) issued by Kondor Finance PLC.

The consent solicitation is expected to be completed by end of July 2023.

The solicitation is to include a 5% payment of the principal, payment of accrued past due interest, the coupon payment due July 2023 and additional interest. The maturity date of the balance of the principal will be extended, with amortization of 50% of the remaining principal amount in July 2024 and 50% in July 2025. The interest due in January 2024 will be deferred to July 2024, with the option to capitalize such interest. Going forward, the coupon on the 2022 Notes will rise to 7.65%. The terms of the consent solicitation to amend the 2022 Notes have been agreed with an ad hoc committee represented by Cleary Gottlieb Steen & Hamilton LLP and led in negotiations by VR Advisory Services Ltd. (“VR Capital”).

More detailed terms of the proposed consent solicitation are set out at the end of this press release.

These agreements have been approved by the Executive Board and the Supervisory Board of Naftogaz and are 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 2022 Eurobond noteholders. I thank in particular Richard Deitz of VR Capital for his constructive approach in our discussions. I call upon 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 our 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.”

Richard Deitz, President of VR Capital said:

The agreements reached are the product of vigorous, good-faith negotiations between the parties and represent a balance between the legitimate commercial expectations of Naftogaz’s bondholders and the needs of the Company to reliably provide critical services during this extraordinary period. Naftogaz, its CEO Oleksiy Chernyshov and his team were clear in communicating their desire to continue to repair the Company’s relations with bondholders in order to ensure the long-term trust and support of markets for Naftogaz. It is our view that this agreement is a positive step in that direction, and I commend all parties for their constructive approach. We believe the agreement reached merit broad Noteholder support and look forward to a successful outcome to the consent solicitation.”

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

Terms of the proposed consent solicitation

Notes Subject of the consent solicitation
  • U.S.$335,000,000 7.375 per cent. Loan Participation Notes due 2022 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 “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
  • 2026 Notes” means the US$500,000,000 7.625 per cent. Loan Participation Notes due 2026 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 2022 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 Cash Payment Amount in respect of the 2022 Notes. 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
  • Initial Principal Payment” means a principal payment amounting to 5% of the outstanding principal amount of the 2022 Notes (i.e. USD 16,750,000)
  • Interest Payment Amount” means, all PDI accrued up to (but excluding) the Implementation Date together with all Additional Interest accrued thereon
  • Longstop Date” means 30 September 2023
  • PDI”, means interest not paid on the relevant contractual due date, assuming that the term of the 2022 Notes had previously been extended and that interest had continued to be due semi-annually
  • Proposals” means the proposals (of the transactions contemplated herein) put to the holders of the 2022 Notes (the “2022 Noteholders”) as they will be set out in the CSM

Cash payment






Principal deferral

  • The 2022 Noteholders will be paid the Cash Payment Amount on the Implementation Date.
  • If the Implementation Date is before 19 July 2023, interest which accrues from (and including) the Implementation Date to (but excluding) 19 July 2023 will be paid on 19 July 2023. If the Implementation Date is after 19 July 2023, interest which accrues from (and including) the Implementation Date to (but excluding) 19 January 2024 will be payable on 19 January 2024, but payment of such interest will be subject to the 2022 Deferral Period (as defined below)
  • Principal Deferral Period: save for the payment of the Initial Principal Payment, defer the payment of outstanding principal until 19 July 2024 (50%) and 19 July 2025 (50%)
Interest deferral
  • The payment of interest that would otherwise be due on 19 January 2024 will be deferred until 19 July 2024 (the “2022 Deferral Period”)
  • Additional Interest will accrue on PDI (including interest payments that otherwise come due during the 2022 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 2022 Deferral Period, or (ii) be capitalized fully or in part at the end of the 2022 Deferral Period (net of PDIs and Additional Interest paid in part prior to such capitalization). Provided however, that interest that will accrue on the 2022 Notes from (and including) 19 January 2024 to (but excluding) 19 July 2024 shall be payable in cash
Interest rate
  • 7.375% per annum (initial contractual rate) to and including the Implementation Date; 7.650% per annum from and excluding the Implementation Date
Consent fee
  • None
Restructuring fee
  • Restructuring/amendment fee payable to the Issuer for further distribution at the instruction of the 2022 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 2022 Notes. There will also be a separate consent for the 2026 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 2026 Notes
‘Fairness’ clause
  • If changes are made to the 2022 Notes covenants (including as contemplated herein), the holders of the 2024 Notes and 2026 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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