Ukraine’s DTEK amends new notes in exchange offer, ups fee, threshold

New York, April 1 – DTEK Finance plc made several changes to its exchange offer for the 9˝% guaranteed senior notes due April 28, 2015 issued by DTEK Finance BV, amending the terms of the new notes that will be issued, lifting the early instruction fee and raising the required level of participation to complete the transaction.

The new notes will now mature in March 2018 instead of April 2019, and 50% of the notes will be redeemed in September 2017 on the interest payment date.

DTEK also shifted the interest payments to March and September from April and October.

The early instruction fee in the exchange is increased to $30.00 per $1,000 principal amount from $20.00 previously.

In addition, DTEK is also requiring that 98% of the outstanding notes be tendered in the exchange, up from the 85% minimum acceptance condition previously.

If this requirement is not met, no notes will be accepted in the exchange but DTEK will go ahead with the proposed scheme of arrangement.

DTEK announced the exchange offer and consent solicitation on March 23, warning that DTEK Finance BV was likely to be unable to repay the notes at their maturity.

The principal amount of notes outstanding is $200 million, of which $19 million is held by the issuer.

As originally announced, the company was offering a combination of new dollar-denominated 10 3/8% guaranteed senior notes due April 2019 (//expected C) to be issued by the DTEK Finance plc and cash, according to a company announcement.

The exchange ratio is 80%, and the cash consideration is $200 per $1,000 principal amount of 9˝% notes.

Holders who tender by the early exchange deadline, 5 p.m. ET on April 8, will also receive an early instruction fee of $20.00 per $1,000 principal amount of notes, an amount now increased.

The company will issue up to $170 million of the new notes. The issue price will be par.

The issuer is soliciting consents to proposed amendments to the indenture that would change the governing law of the indenture, the notes and the indenture guarantees to English law and include provisions for trustees that are market standard.

Consents are needed from the holders of at least a majority of the outstanding notes, excluding any notes held by the issuer and its affiliates, in order to adopt the proposed amendments.

The exchange offer and consent solicitation will end at 5 p.m. ET on April 22.

The offer is conditioned on the receipt of tenders for at least 85% of the principal amount of notes outstanding, excluding any notes held by the issuer and its affiliates. This condition cannot be waived, but the percentage has now been increased.

Scheme

Concurrently with the exchange offer, the issuer intends to apply to the High Court of Justice of England and Wales to request the sanctioning of a scheme of arrangement under which the issuer would be sanctioned by the court to acquire the outstanding 9˝% notes on the terms of the exchange offer.

Holders who tender notes in the exchange offer will be deemed to give an irrevocable instruction in favor of the proposed scheme.

The issuer reserves the right to proceed with the scheme even if the minimum acceptance condition is met, and all irrevocable instructions will remain irrevocable even if the offeror elects not to complete the exchange offer.

The issuer expects to hold a noteholder meeting on April 23 to consider the scheme.

Votes in favor of the scheme are needed from at least half of the noteholders represented at the meeting and from the holders of at least 75% of the principal amount of 9˝% notes represented at the meeting.

If the court sanctions the scheme in a court hearing on April 27, the 9˝% notes would be acquired by the issuer, all of the then-outstanding 9˝% notes would be canceled, and the holders would receive the exchange offer consideration.

If the minimum acceptance condition is met and the offeror elects to complete the exchange offer and terminate the scheme, the holders of the 9˝% notes tendered in the exchange offer will receive the new notes and the cash consideration, and the remaining 9˝% notes will be redeemed at maturity on April 28, 2015.

If the minimum acceptance condition is not satisfied and the exchange offer is not completed but the scheme becomes effective, all noteholders, whether or not they participate in the exchange offer and consent solicitation, will receive the new notes and the cash consideration.

The issuer said that if the exchange offer is not completed and the scheme is not approved, it is unlikely to be able to repay the 9˝% notes on their maturity date, which would trigger an event of default under the 9˝% notes and cross defaults under some of the issuer's other debt.

If the proposed amendments are made and the scheme is not approved or fails for any other reason, the noteholders would likely be left with a default of 9˝% notes governed by English law.

The dealer manager is Deutsche Bank AG, London Branch (+44 20 754 73693 or dtek.liability.management@list.db.com). The exchange agent is Bank of New York Mellon (+44 1202 689 644, 315 414 3360, debtrestructuring@bnymellon.com or ct_reorg_unit_inquiries@bnymellon.com).

DTEK Finance is part of an energy group based in Donetsk, Ukraine.

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