KYIV, March 31 - Ukraine’s largest coal producer DTEK said Tuesday it started talks with international creditors over restructuring of debts, the latest sign of stress on the company from the coronavirus pandemic.
DTEK owed $1.95 billion in debts, including $1.24 billion in Eurobonds and $711 million in banking loans, as of July 1, 2019, according to the company. Most of the debts are due in 2023 and 2024.
“In the context of the growing economic crisis caused by the COVID-19 pandemic and the collapse of commodity prices, DTEK takes emergency measures and suspends the payment of coupons on Eurobonds and interest on bank debt,” DTEK said in a statement.
DTEK, which is owned by Rinat Akhmetov, the wealthiest Ukrainian, is the first major company showing signs of distress as coronavirus wreaks havoc on global markets. Akhmetov’s other major holding is Metinvest, the country’s largest steel and mining group.
Ukraine’s steel sector was also hit hard by the pandemic as global demand for steel had dwindled due to lower demand from automakers and homebuilders around the world.
The developments come days after DTEK has announced it will shut down three coal mines due to the lack of demand as the economy has slowed amid massive quarantine measures due to the COVID-19 pandemic.
Ukraine on March 24 declared emergency and introduced massive quarantine measures until April 24 in order to slow down the spread of the coronavirus.
“This means DTEK must immediately take all necessary measures to maximize concentration of resources to provide Ukrainians with power and heat during the quarantine period,” Dmytro Sakharuk, the CEO of DTEK Energo, said in the statement.
DTEK already held preliminary consultations with the creditors, Sakharuk said, adding that he was confident that the talks will be successful. He said the talks focus on more favorable interest rates and longer maturity to convert the existing debts amid the COVID-19 emergency.
“We want to switch to new terms of debt servicing in order to reduce economic burden on the company, save jobs and ensure uninterrupted operation,” Sakharuk said.
DTEK said Monday it will shut down two out of five thermal coal mines at Dobropillia Vuhillia and one Belozerska coalmine, as well as Zhovtneva coal enrichment plant, starting on April 1. The company said it will keep its 8,000 coalminers working at to-be-shut mines on payroll.
DTEK decreased coal output by 9.8% year-on-year to 24.51 million metric tons in 2019 from 27.18 million mt in 2018, according to the company.
Output of thermal coal in 2019 fell 7.1% year-on-year to 22.4 million mt from 24.1 million mt in 2018. (sb/ez)
|