Ukrenergo Revises Liability Management Terms for Its $825 Million Green Notes

How the Ukrenergo tender offer and exchange offer actually work

Cash tender offer: up to $445 million can be used to buy back notes

Ukrenergo plans to raise $445,000,000 via DFI-backed financing and use that cash to repurchase some of the notes. The tender offer uses an unmodified reverse Dutch auction process. In plain English, holders submit the price at which they are willing to sell, and Ukrenergo accepts bids up to a ceiling price of 65.125% of principal plus Accrued and Past Due Interest.

If the tender offer is oversubscribed, notes tendered at the cut-off price are accepted on a pro rata basis. Any notes not accepted then roll into the exchange offer on the same terms as notes that were voluntarily exchanged. That stops investors being left in limbo if too many people choose cash.

Exchange offer: new debt replaces old debt

Holders can instead swap their existing notes for New Notes. These New Notes are unguaranteed, which is important – the existing notes are guaranteed, so investors are giving up that protection. In return, they get a higher 8.5% coupon and a maturity extended to December 2031.

Voluntary participants in the exchange offer receive $1 in principal amount of New Notes for each $1 in principal amount of the old notes and Accrued and Past Due Interest as at 1 July 2025, subject to the cash allocation mechanisms. That is more generous than the mandatory exchange terms for holders who do not participate.

Mandatory exchange: the stick alongside the carrot

If holders do not voluntarily tender or exchange, they can still be caught by the mandatory exchange mechanism, subject to the non-participating holder cash allocation. In that case, they receive only $0.80 in principal amount of New Notes for each $1 in principal amount of the old notes and relevant interest as at 1 July 2025.

That is the big pressure point in this structure. The message is obvious: engage with the deal, or risk worse economics.

Why the revised Ukrenergo green notes deal is positive

The most encouraging part is that negotiations are still alive after a long delay. A missed target date can easily turn into a dead transaction, but here the company and the ad hoc group have stayed at the table. That alone is better than a breakdown.

The higher Available Cash is another positive. More cash usually means a better chance of getting bondholders across the line, especially those who prefer immediate liquidity to a longer-dated restructuring instrument.

The added cash interest payment on the New Notes for the period from 1 July 2025 to settlement is also sensible. Without it, holders would have been asked to swallow a long implementation delay with little compensation. This tweak makes the revised proposal look more balanced.

There is also visible support from the ad hoc group, which originally represented around 40% of outstanding notes, with the broader supporting holder base above 45% at the time of the original announcement. That is not enough on its own to force a deal through, but it is a meaningful base.

Why the revised terms are still tough for bondholders

Let’s not dress this up. This is still a restructuring, and restructurings are usually about creditors accepting less favourable terms than they originally signed up for.

The new paper runs out to December 2031 instead of 2028, so money comes back later. The New Notes are also unguaranteed, which weakens the credit support compared with the existing guaranteed notes. Even with an 8.5% coupon, that is a significant give-up.

The compulsory cash allocation and mandatory exchange mechanisms are also hard-nosed. Non-participating holders can be repurchased at 60% of principal plus Accrued and Past Due Interest, and if they stay outside the deal they may be pushed into New Notes at an exchange ratio of just $0.80 per $1. From Ukrenergo’s perspective, that helps execution. From a holdout investor’s perspective, it is a warning shot.

What retail investors should watch next in the Ukrenergo liability management process

First, this term sheet is explicitly not legally binding. It sets out the high-level terms, but the transaction still has to be implemented. So the deal is closer, not done.

Second, the $445,000,000 cash component depends on a separate financing transaction. Ukrenergo says it is reasonably confident that financing can be completed if noteholders agree to the proposed terms, but it is still contingent.

Third, the consent solicitation needs a Single Series Extraordinary Resolution, requiring at least 75% support from holders present at a quorate meeting, with quorum of not less than 66% in aggregate principal amount outstanding. That is a meaningful threshold.

Finally, timing matters. The ad hoc group’s commitment applies provided the tender and exchange offer settles on or before 1 July 2026, and Ukrenergo says it expects implementation before the end of June 2026. That gives the company a clear deadline and not much room for another slip.

Bottom line on Ukrenergo’s revised $825 million green notes restructuring

My read is that this update is cautiously positive for execution, even if the economics remain tough for creditors. Ukrenergo has improved the package in practical ways – more cash, a clearer repayment profile, and a catch-up interest payment – because the original timetable slipped badly. That is the company acknowledging reality rather than pretending nothing changed.

For investors, the big takeaway is simple: the deal is moving forward, but it is still a compromise born from stress. If completed, it should ease near-term pressure on Ukrenergo by pushing out maturities and mixing cash buybacks with new debt. For bondholders, the choice is between taking part on revised terms now or risking less attractive treatment later.

One final point: this announcement is aimed at qualified investors and not UK or EEA retail investors. So for most retail readers, this is less about whether you can participate and more about understanding what it says about Ukrenergo’s financial position and its ability to get a delayed restructuring over the line.