State-owned Ukrzaliznytsia, which unites all of Ukraine's railway companies, has notified creditors of the occurrence of a technical default on its debt obligations, a cross-default on eurobonds worth $500 million and has announced its plan to restructure its internal and external debts worth UAH 32 billion.

"Today we have notified our creditors of technical default on a number of Ukrzaliznytsia's obligations," Ukrzaliznytsia acting CEO Maksym Blank said at a briefing in Kyiv.

"Today we've started negotiations, particularly on the domestic debt, afterwards we will hold talks on the foreign debt, including with respect to $500 million eurobonds," he added.

Blank said the basis for this move is the extremely difficult situation in the country, Donetsk Railways' being beyond the control of transportation processes which are performed centrally, the significant drop in commodity turnover, as well as "the years of mismanagement and corruption Ukrzaliznytsia has been suffering from during the last few years."

"The total amount of debt to be restructured is UAH 32 billion. Negotiations on restructuring will take place in the next two months," he said.

He said that Ukrzaliznytsia's total debt is UAH 37.5 billion, in particular its internal debt is UAH 22 billion.

He went on to say that restructuring, carried out within the overall restructuring of Ukraine's foreign debt in accordance with the IMF program, does not cover Ukrzaliznytsia's debts to official creditors, including the European Bank for Reconstruction and Development and the Export-Import Bank of Korea.