Ukrzaliznytsia in constructive dialogue with creditors – CEO
Ukrzaliznytsia (Ukrainian Railways), which missed $45 million in interest payments on its 2026 and 2028 Eurobonds in January, is in a constructive dialogue with creditors, although initial restricted talks in early April ended without a deal, CEO Oleksandr Pertsovsky said.
"Creditors are listening to us; they have also formed their own creditors’ committee… We are in a constant dialogue. There are advisors, legal and financial advisors, who are communicating in an organized format at all times," Pertsovsky told Interfax-Ukraine on Tuesday on the sidelines of a ceremony for EUR 54 million in grant agreements with the EU and EBRD.
Pertsovsky said that he could not disclose details of the dialogue.
"It is very important for us not to just restructure the debt for the sake of it, but to restructure it on terms that will be acceptable for our company in the long term. These must be manageable financial costs. If it isn’t a permanent restructuring, but something that only provides a one- or two-year breather, the problem will not be solved," the CEO said.
He recalled that the company is currently operating under a significant drop in transportation volumes and rising energy prices, so financial costs must be realistic to allow the company "to breathe."
Pertsovsky stated that a consensus with eurobond holders has not yet been reached.
Regarding proposals made during the restricted talks, the CEO highlighted certain mechanisms that offer creditors a chance to share in the company’s success, as specific payments are tied to the recovery of cargo volumes.
"To keep it realistic: if things go better, their financial position will improve accordingly," Pertsovsky noted.
As reported, in January 2025, Ukrzaliznytsia capitalized coupon payments deferred during the 2022 restructuring: $108.28 million for 8.25% 2026 Eurobonds and $51.9 million for 7.875% 2028 eurobonds. This increased the outstanding volumes to $703.2 million and $351.9 million, respectively.
In January this year, the company declined to make $45 million in coupon payments due Jan 9 and Jan 15 and announced plans to begin a comprehensive restructuring of its financial obligations with the help of qualified advisors.
The company cited a continued decline in cargo revenue amid an expected 17% volume drop in 2025 and intensified attacks on railway infrastructure as primary reasons for halting debt service. There were 1,195 attacks in 2025, exceeding the combined total for 2023-2024.
According to a presentation, Ukrzaliznytsia revenue fell 15.6% in 2025 to $2.189 billion, and EBITDA dropped 30.2% to $293 million, of which $270 million was budget support. The net debt-to-EBITDA ratio rose to 5.2.
Ukrzaliznytsia held restricted talks with an ad hoc group (AHG) of bondholders from April 1 to April 8, presenting a restructuring proposal that has yet to yield a result. The company is advised by Clifford Chance LLP, Sayenko Kharenko, Rothschild & Cie, and FinPoint LLC. The AHG is advised by Hogan Lovells International LLP.
According to the proposal, Ukrzaliznytsia suggested a 20% principal haircut, extending the final maturity to June 2033, and starting soft amortization in December 2030 via six equal installments of $150 million.
The company also wants to tie these payments to cargo volumes. "Each individual $150 million payment can be adjusted up or down within a range of $112-168 million depending on cargo transportation volumes," the presentation said.
Proposed cash interest rates are 1.5% for the first year (June 2026-June 2027), 2% for the second, 4% for the third, 6% for the fourth, and 7.75% for the final three years.
Regarding overdue interest, which will reach $83 million by June 30, Ukrzaliznytsia proposed a 20% haircut, paying 20% of the remaining $67 million in cash (1.3 cents on the dollar) and capitalizing the rest into a new instrument.
If accepted, the company would pay just $20 million and $16 million in cash on Eurobonds this year and next, respectively, followed by $77 million in 2028, $121 million in 2029, $240 million in 2030, $389 million in 2031, $434 million in 2032, and $155 million in 2033.
