Naftogaz of Ukraine hires dealer manager for eurobond restructuring

By Caroline Salls

Pittsburgh, Sept. 2 - NJSC Naftogaz of Ukraine has appointed Credit Suisse's liability management team to act as dealer manager in the planned restructuring of the company's $500 million eurobond due Sept. 30, 2009 and bilateral loan obligations, according to a company news release.

NJSC Naftogaz said an extension of the maturity of the eurobond will help it best manage its financial situation in light of tough market conditions and structural difficulties in the domestic and international gas market.

According to a report released by the company Wednesday, NJSC Naftogaz Ukraine has also started negotiations with its lenders in order to restructure its borrowings.

However, the company said there is no guarantee that the measures included in its financial plan will be implemented or the restructuring will be completed, raising significant doubt about its ability to continue as a going concern.

Under the proposed restructuring of the company's $1.6 billion of debt owed to foreign banks, NJSC Naftogaz said it is aiming to extend payment terms and amend other significant loan terms.

In the report, the company said the demand for gas from Ukrainian industrial customers has decreased significantly as a result of the increase in the price of gas and the impact of the global financial and economic crisis.

NJSC Naftogaz said this decrease in demand and the deterioration of the payment discipline among gas customers could negatively impact the company's ability to obtain enough cash inflow from its operating activities to settle its bank loan, interest, gas payables and other debt obligations.

NJSC Naftogaz said the operations and financial performance of the group are dependent on its ability to prolong an agreement with the State Property Fund of Ukraine.

Naftogaz is a Kyiv, Ukraine, energy company.

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