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UPDATE 3-Naftogaz bondholders approve only partial restructuring

·2 min read

(Adds bond prices, changes byline)

By Marc Jones and Akriti Sharma

LONDON, Aug 31 (Reuters) - Ukraine's state-owned gas company Naftogaz remained stuck in default after a proposal to push back debt payments for two years due to the war with Russia only secured the backing of holders of one of the bonds in question on Wednesday.

Naftogaz said holders of its bonds maturing in 2024 had agreed for it to push back payments but those of its 2026 paper had not.

Holders of its other main bond which should have been fully repaid this year had already rejected a proposal earlier this month.

Naftogaz, which accounted for almost 17% of Ukraine's total state budget revenue last year, has been in default since it missed nearly $1 billion worth of debt payments last month.

Results of the vote showed that 77% of the 2024 bondholders who submitted votes backed the plan, but only 43% of participating 2026 bondholders did so, well short of the 75% required.

"For this issue of Eurobonds maturing in 2024 the restructuring was successful, whereas for other issues, we still need to find a solution," Naftogaz CEO Yuriy Vitrenko told Reuters. "Yields are too high, market values are too low compared to the nominal value, so that's why it's not an easy sell."

Both the 600 million euro 2024 note and the $500 million 2026 traded at 21 cents on Wednesday according to Refinitiv data.

Vitrenko added that the support of the European Bank for Reconstruction and Development, a major holder of the 2024 bonds, had been critical in ensuring that positive outcome.

Naftogaz's management said in a statement alongside the regulatory filing of the vote outcome that it is "considering next steps in respect of the 2022 Notes and the 2026 Notes, together with the Cabinet of Ministers of Ukraine as sole shareholder and the Ministry of Finance."

Naftogaz remains under an order that prohibits the company making any debt-related payments without the approval of the cabinet.

The company said it has asked the government to approve transactions related to the approved request to holders of the 2024 bonds.

"In the near future, Naftogaz will reach out to the Cabinet of Ministers of Ukraine with a proposal to develop a joint position on further actions to restructure the company's Eurobonds," it said in a statement on its Telegram channel. (Reporting by Marc Jones, Karin Strohecker and Akriti Sharma; Additional reporting by Andrea Shalal, Anna Pruchnicka and Rodrigo Campos; Editing by David Goodman, Kirsten Donovan and Josie Kao)