Lukoil invites holders to submit notes from five series for purchase

By Marisa Wong

Los Angeles, Aug. 2 – PJSC Lukoil is inviting holders of its outstanding notes from five series to contact i2 Capital Markets Ltd. or Lukoil Securities Ltd. for potential purchase of the notes, according to a press release.

Each series will be purchased for the sole purpose of their cancellation, the issuer said.

Lukoil is extending the offer to holders of the following:

• $1.5 billion 4.563% notes due 2023 (ISIN: XS0919504562, US549876AH32) issued by Lukoil International Finance BV and guaranteed by Lukoil;

• $1 billion 4¾% notes due 2026 (ISIN: XS1514045886, US549876AL44) issued by Lukoil International and guaranteed by Lukoil;

• $1.15 billion 2.8% notes due 2027 (ISIN: XS2401571448, US549875AA06) issued by Lukoil Capital DAC and guaranteed by Lukoil;

• $1.5 billion 3 7/8% notes due 2030 (ISIN: XS2159874002, US54988LAB27) issued by Lukoil Securities BV and guaranteed by Lukoil; and

• $1.15 billion 3.6% notes due 2031 (ISIN: XS2401571521, US549875AB88) issued by Lukoil Capital and guaranteed by Lukoil.

The consideration to be offered for each $1,000 principal amount of notes will be negotiated individually.

Any holder wishing to participate in the offer is invited to contact i2 Capital Markets (info@i2capmark.com; +44 203 633 1212; 128 City Road, London EC1V 2NX United Kingdom; https://i2capmark.com/event-details/57/Holder/lukoil-securities-limited) or Lukoil Securities (stanislovas.jarusevicius@lukinv.com; +31-6-21-33-58-20; Delfon & Achaion 10, 1st floor, 1101, Nicosia, Cyprus).

Background

Because noteholders in Russia are currently unable to receive payments due under the notes through the international clearing systems, Lukoil is now obliged to make direct payments to the Russian noteholders.

In addition, payments due under the notes in favor of holders in some foreign countries may only be made under a special license issued by the Russian authorities that is subject to the receipt by the Russian noteholders of their portion of the payments due under the notes. There is no guarantee that Lukoil will be able to obtain such license, and as a result it may be unable to make payments to noteholders outside of Russia.

Also, even if Lukoil obtains such license, the license would likely only permit Lukoil to make payments through the international clearing systems in the amount owed to the foreign noteholders rather than the full amount outstanding under the relevant series of notes, which may cause a potential event of default to occur under the notes.

Furthermore, additional changes in Russian legislation may occur, which could further complicate or limit Lukoil’s ability to make payments under the notes or prohibit Lukoil from making those payments.

There is also a risk that the international infrastructure required for servicing the notes will be further impaired. For example, the company has recently received resignation notifications from the trustee and paying agent for each series of the notes, and there is no guarantee that it will be able to make substitute appointments.

Lukoil said that at present it has sufficient cash available to purchase any and all outstanding notes during this period of uncertainty in a manner that is consistent with its ongoing financial policy objectives.

Therefore, this offer gives noteholders an opportunity to enhance the liquidity of their notes prior to maturity that may not otherwise be available.

The oil and gas company is based in Moscow.

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