A hedge fund that publicly donated $1mn to supply humanitarian help to Ukraine can be resisting efforts from the nation’s state-owned gasoline firm to safe extra respiratory room on its debt.
London-based VR Capital is likely one of the lead traders concerned in a stand-off between Naftogaz and its bondholders, stated folks aware of the possession of the bonds, because the vitality firm tries to delay compensation by two years.
Naftogaz, the largest state-owned firm in Ukraine, was instructed to restructure by the Ukrainian authorities, the Financial Times reported in July, because the nation seeks to renegotiate its sovereign debt to protect money for its fightback in opposition to Russia’s invasion.
The Ukrainian authorities stated in August it was “counting on a favourable decision” from Naftogaz bondholders to “make it possible to consolidate all existing resources for the state’s primary needs”.
However, holders of its bonds maturing in 2022 and 2026 have rejected the corporate’s proposals, leaving the corporate in default. In distinction, traders within the 2024 bonds have accepted the plan, permitting €600mn of principal funds and €90mn of curiosity to be deferred.
VR, headed by Richard Deitz, a former co-founder of funding financial institution Renaissance Capital, is an enormous holder of the bonds and has taken a lead function in blocking the plans, stated folks aware of the restructuring.
VR’s transfer comes simply months after it stated that it, together with staff and Ukrainian associates, had offered greater than $1mn in humanitarian and logistical help to Ukraine and was ready to supply additional assist.
Deitz stated on the time that: “We are devastated by the ongoing hostilities in Ukraine and horrified by the images of atrocities committed against civilians emerging in recent days. We stand together with the Ukrainian people.”
He added: “As one of the largest western investors in Ukraine, we pray for an immediate end to the conflict and are ready to participate in the country’s reconstruction after the war.”
The Ukrainian authorities stated final month that delaying bond funds would “enable Naftogaz to use the accumulated funds for natural gas import and preparation for the heating season, which could be the most difficult in modern Ukrainian history”.
Bondholders, which embody each hedge funds and extra conventional asset managers, argue that Naftogaz is definitely in a position to pay its bonds again and that the choice to push again funds is politically pushed. “There is a lot of frustration that the company hasn’t engaged,” stated one individual aware of their considering.
Earlier this month Naftogaz stated it had begun arbitration proceedings in opposition to Russia’s Gazprom, claiming it had not paid for gasoline transportation by means of Ukraine.
VR declined to remark.