Game of chicken Kiev? Bank threatens to auction Ukrtelecom unless debt is paid

21 Aug 2019

The State Executive Service of Ukraine (under the Ministry of Justice) has ‘arrested’ the controlling 92.79% stake in nationwide fixed line operator Ukrtelecom due to its parent’s debt to state-backed bank Oschadbank, according to a statement from the latter reported by Liga.net. Oschadbank says that Ukrtelecom’s shares can be sold via public auction in order to pay off nearly UAH1.8 billion (USD71 million) owed to the bank by holding company ESU, part of Ukraine’s SCM conglomerate owned by Rinat Akhmetov. Whilst Oschadbank claims that the threat to seize and sell shares is supported by Supreme Court decisions, its statement added: ‘At the same time, we hope for the possibility of a peaceful settlement of the existing debt with the debtor.’

Last month the Supreme Court ordered SCM/ESU/Ukrtelecom to pay Oschadbank UAH1.5 billion in debt and interest, stemming from the group’s failure to pay back a UAH1 billion bond. The apex court overturned previous decisions in the telco’s favour from the Kyiv Economic Court and an appeal court. Oschadbank and another financial institution, state-owned UkrEximbank, had filed claims against Ukrtelecom and SCM for failing to fulfil a 2015 pledge to buy out existing UAH2 billion bonds of ESU, after SCM took control of Ukrtelecom in 2013.

Liga.net adds that on 14 August 2019 it learned that the State Executive Service had opened a new procedure aiming to recover UAH810 million owed by ESU to UkrEximbank representing interest on bonds.

Ukraine, Ukrtelecom (incl. TriMob)