Ukrainian railways miss loan payment related to Shortline 9˝% notes

By Caroline Salls

Pittsburgh, May 12 – Several state railway borrowers failed to make loan payments related to Shortline plc’s $500 million of 9˝% loan participation notes due 2018, according to a notice to noteholders.

The borrowers’ failure to make the bilateral loan agreement payments to Ukrainian banks triggered an event of default under the cross-default provisions of the loan agreements.

Shortline said the State Administration of Railways Transport of Ukraine (Ukrzaliznytsia) has said that it is possible that other events of default may have occurred and it is considering the impact of some events on the terms of the loans and, in turn, the notes.

In particular, Ukrzaliznytsia said it doubts whether it continues to exercise management control over Donetsk Railway.

Ukrzaliznytsia plans to start discussions with the group's lenders in the coming weeks in relation to a possible debt operation in order to reach a solution that places the group on a sustainable economic and financial path.

According to the notice, the debt operation would target debts the group owes to the private sector, including the loans underlying the notes, which is also part of the debt operation being pursued by the Ministry of Finance in line with provisions of the International Monetary Fund's extended fund facility.

London-based Shortline said the notes were issued for the sole purpose of funding loans made to several state railways.

© 2015 Prospect News.
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