Ukrenergo launched restructuring of Eurobonds worth $825 million: what exactly was offered to creditors
Ukrenergo has officially launched the restructuring of Eurobonds worth $825 million, payments on which were suspended back in 2024. Bondholders are offered two main options: sell part of the company's bonds for cash or exchange them for new debt securities.
Up to $445 million is planned to be used to buy back the old obligations. For the Ukrainian energy system, the point of the deal is not to receive new $825 million, but to reduce the debt burden: Ukrenergo directly states that it intends to use the savings on the principal amount of debt and interest payments to restore and maintain power grids during the war.
What exactly was offered to creditors
This concerns the bonds issued by Ukrenergo for $825 million with a rate of 6.875% per annum and a maturity date in 2028. These securities are guaranteed by the state.
Now bondholders will be able to offer them to Ukrenergo for cash repurchase. The price will be determined through the so-called Dutch auction and may range from 60% to 65.125% of the amount of the relevant obligations including accrued and overdue interest.
In total, the company is ready to allocate no more than $445 million for such repurchase. Financing is planned to be raised through a special structure with credit support from an international financial development institution.
The second option for creditors is to exchange old bonds together with accrued interest for new securities. For participants in the voluntary exchange, a ratio of $1 of new indebtedness for each $1 of old obligations and corresponding interest is provided.
Why Ukrenergo is restructuring this debt at all
In November 2024, the company suspended payments on Eurobonds as part of Ukraine's decisions on state and state-guaranteed debt. Before that, payments on part of the interest had already been deferred after the start of the full-scale war.
Negotiations with major bondholders lasted a long time. The parties reached the first fundamental agreement in April 2025, but the deal was not completed at that time. In April 2026, the terms had to be revised, and now a formal restructuring procedure is beginning.
Ukrenergo itself explains the need for the deal by the extraordinary burden on the company due to the war. The transmission system operator must simultaneously maintain the operation of the power system and restore infrastructure damaged by Russian attacks.
What will change for the energy system
The main goal of the deal is to reduce the volume of funds that in the coming years will have to be spent on servicing the old debt.
If part of the Eurobonds can be bought back for less than the full amount of the obligations, the corresponding debt will be repaid at a discount. The remaining part of the debt can be extended to a longer period through new securities.
According to previously agreed terms, the new bonds should have a rate of 8.5% per annum, and repayment of the principal amount is planned to be made in installments starting from June 2028 with final settlement in December 2031.
Although the rate of the new bonds is higher than the current 6.875%, several elements of the deal are important for Ukrenergo: repurchase of part of the debt at a discount, change in the payment schedule, and obtaining additional time.
The company explicitly states that the savings on the principal amount of debt and interest obtained as a result of the restructuring are planned to be directed to the restoration and maintenance of the Ukrainian power grid.
This does not mean Ukrenergo will receive $825 million for grid repairs
The amount of $825 million is the volume of the existing bond issuance, not a new loan for the energy sector.
The new money attracted as part of the operation is primarily intended for settlements with current creditors. The economic effect for the energy company should arise from the change in the structure of the debt itself and the reduction of pressure of future payments on its finances.
Therefore, the result for the energy system will be indirect but significant: the less funds the operator has to divert from current resources to service old debt obligations, the more financial space remains for repair, operation, and restoration of transmission networks.
When will it become clear whether the restructuring has taken place
Offers to bondholders are valid until September 28, 2026. A meeting of bondholders is scheduled for October 1, at which they must vote for the necessary changes to the terms of the issuance and the state guarantee.
To make the key decision, attendance of holders of at least two-thirds of the outstanding bonds and support of at least 75% of the meeting participants are required.
If the necessary conditions are fulfilled, settlements under the deal are expected in early October. Ukrenergo also intends to terminate the listing of existing bonds on the main platform of the London Stock Exchange after the operation is completed.
Thus, on August 28 the company did not complete the restructuring but officially launched its final market phase. The result will be known after creditors make a choice between cash repurchase and new bonds and vote for changing the debt terms.
