Ukraine's Ukrtelecom Seeks Debt Restructuring

KIEV, Ukraine -- Ukrainian telecoms firm Ukrtelekom is the latest state-controlled company seeking to restructure its foreign debt, a letter from its chairman of the board to the state communications authority showed on Tuesday.

Ukrtelekom third state firm to seek restructuring.

The letter says Ukrtelekom wants to pay $14 million of the $55.6 million due by Feb. 25 on $500 million in debt owed to Credit Suisse First and Deutsche Bank. The rest, it said, it wants to pay within three months of the deadline.

Similar deals for other state companies have prompted broader concerns about Ukraine's debt ratings and finances, although the scale of the restructuring is far smaller than those sought by energy firm Naftogaz and the state railway.

"We are announcing that using our own funds, we plan to repay 25 percent of the the debt owed to Credit and Deutsche on Feb 25...," the letter said.

"Ukrtelekom is conducting talks with the creditors for a delay of the repayment date for 75 percent of the payment...," it said. The debt was issued in 2005 and Ukrtelekom began making twice yearly payments as of 2008.

The company declined to comment.

Ukrtelekom has been slated for privatisation for years but its initial public offering had been delayed by political wrangling and infighting. Estimates of its value have swung anywhere from $3 billion to $1 billion.

The company has been helped by the state with the issue of the country's only 3G license but is weak in the mobile market against competitors such as Russian MTS (MTSI.MM) and Kyivstar, controlled by Russia's Alfa Group and Norway's Telenor (TEL.OL).

Analysts and investors had worried all last year that Ukraine was on the edge of a sovereign default. Although the state never did delay debt repayments, the technical default of ailing energy giant Naftogaz proved some of those fears right.

Naftogaz successfully renegotiated its debts, but it was the unexpected announcement by state railway firm Ukrzalyznitsya that it wanted to restructure $440 million of a $550 syndicated loan that sent European markets reeling, albeit briefly.

Acting Finance Minister Ihor Umansky said earlier this month the state railway will end restructuring talks within a month.

Despite implicit guarantees, none of the restructured loans were found to actually have a state guarantee which meant that negotiations did not translate into a sovereign default.

Source: Guardian UK

Comments