Vodafone Ukraine agrees to defer eurobond repayment for 2 years with rate increase, 2% interest
PrJSC VF Ukraine (Vodafone Ukraine), the second largest mobile operator in the country, agreed with the holders of its eurobonds for $399.88 million to defer their repayment for two years - until February 11, 2027, proposing to partially repay $99.88 million plus accrued interest, increase the coupon rate from 6.2% to 9.625% and pay interest of 2% of the par value.
According to the company's announcement on the Irish Stock Exchange, the corresponding decision was made by the meeting of eurobond holders on February 5.
"Accordingly, the documentation on amendments has been signed and will come into full force upon receipt of the NBU notification, which is expected to occur on or about February 6, 2025. The payment date is expected to be on or about February 11, 2025," the exchange said in its filing.
Vodafone Ukraine had previously agreed on this proposal with a special committee of 31% bondholders and another bondholder, who collectively owned 49% of all bonds.
The company made such a request to its eurobond holders due to restrictions imposed by the National Bank of Ukraine after the start of full-scale aggression by the Russian Federation: although the company has hryvnias for this purpose within the country, it cannot buy foreign currency for them to redeem bonds outside the country. At the same time, after some relaxation of these restrictions, Vodafone Ukraine can service the interest on eurobonds.
In January-September 2024, the company achieved revenue growth of 13% to UAH 18.1 billion and operating profit growth of 6% to UAH 9.6 billion, although net profit decreased, mainly due to exchange rate fluctuations, by 23% to UAH 2.9 billion. Its customer base grew by 4.7% to 15.9 million, and ARPU by 8.9% to UAH 122.4 per month.
It was noted that as of September 30, 2024, Vodafone Ukraine had UAH 12.7 billion ($308 million) in available cash, cash equivalents and deposits (including government bonds) and had net debt of UAH 10.1 billion ($244 million), and currently available cash has decreased to approximately $270 million. The company also entered into a credit line with a Ukrainian bank, under which it can receive an additional $50 million in financing in Ukraine, but has not yet used it.
The information indicates that, with the support of its shareholder, Vodafone Ukraine has accumulated $53.5 million in its offshore bank account, and this amount can be increased by a loan from its shareholder Telco Investment BV for $53.5 million. During the two-year deferment, Vodafone Ukraine intends to accumulate sufficient funds outside of Ukraine, which will allow it to fully repay the eurobonds.
J.P. Morgan Securities plc assisted the company in the transaction.
On the Frankfurt Stock Exchange, Vodafone Ukraine Eurobonds are quoted at 99% of the par value, while before the start of the offer, the price was 89%.
As reported, on February 14, 2024, the Ukrainian government asked the National Bank to allow the sale of foreign currency to large Ukrainian companies and holdings and its subsequent transfer for settlements on eurobonds and with Western creditors. The list included VF Ukraine, companies from the pipe and wheel holding Interpipe, the largest mining and metallurgical holding Metinvest, the agroholding Kernel and three DTEK holdings: DTEK Energy, DTEK Renewables and DTEK Oil & Gas.
However, the National Bank did not satisfy these requests, and in May and July, it relaxed currency restrictions, making it easier to service corporate eurobonds, while their repayment remains a problem. In August, Vodafone Ukraine paid another interest income on eurobonds in the amount of $12.4 million from the company's Ukrainian bank account.
Since December 2019, Vodafone Ukraine has been part of NEQSOL Holding, a diversified group of companies operating in the energy, telecommunications, high-tech and construction industries.