Ukrtelecom to restructure debt to avoid default

24 Feb 2010

Ukrainian state-owned fixed line, broadband and 3G mobile operator Ukrtelecom is seeking to restructure its foreign debt, according to a letter from its chairman of the board to the country’s communications authority on Tuesday, seen by Reuters. The telco is due to repay a USD55.6 million loan instalment to Credit Suisse First and Deutsche Bank on 25 February, but the letter said that it wants to pay USD14 million of this amount on the agreed date, and the remainder within three months. It owes USD500 million to the two banks. ‘Ukrtelecom is conducting talks with the creditors for a delay of the repayment date for 75% of the payment,’ the letter read. The debt was issued in 2005 and Ukrtelecom began making twice yearly payments in 2008, but like many companies in Ukraine the telco has faced significant challenges caused by the worldwide economic slump, which led to a severe weakening of the local currency, the hryvnia. As reported in CommsUpdate yesterday, the national PTO posted a net loss of UAH456 million (USD58 million at today’s exchange rate) in full-year 2009, although this narrowed from a loss of UAH1.53 billion in 2008. As Reuters points out, the scale of Ukrtelecom’s proposed debt restructuring is far smaller than similar arrangements recently sought by other Ukrainian firms, in particular energy firm Naftogaz and the state railway operator.

Ukraine, Ukrtelecom (incl. TriMob)