Cision PR Newswire
Creditor update in relation to the tender offer and consent solicitation relating to the 7.0/7.5% Senior Secured PIK Toggle Notes due 2027 (ISIN: XS2342930521, the "Notes") issued by DTEK Energy B.V. (the "Issuer")
News provided byDTEK Energy B.V.
Sep 27, 2023, 9:33 AM ET
LONDON, Sept. 27, 2023 /PRNewswire/ -- On 12 September 2023, the Issuer and DTEK Holdings Limited (the "Offeror") published a tender offer and consent solicitation memorandum (the "Memorandum") setting out the terms of certain proposed amendments to the indenture governing the Notes (the "Indenture") and a tender offer for the Notes by the Offeror. Following the publication of the Memorandum an ad hoc group of holders of the Notes (the "Ad Hoc Group") engaged Cleary Gottlieb Steen & Hamilton LLP ("CGSH") and entered into discussions with the Issuer and the Offeror with respect to the terms of the consent solicitation and the tender offer.
On 25 September 2023, the Issuer and the Offeror published an amended and restated tender offer and consent solicitation memorandum (the "Amended and Restated Memorandum"). Terms defined in the Amended and Restated Memorandum are used herein as so defined unless expressly indicated otherwise.
Although the Amended and Restated Memorandum incorporates a number of comments raised by the Ad Hoc Group, the Issuer has largely retained proposed amendments to the Restricted Payments covenant contained in the Indenture and to certain related definitions (despite the concerns expressed by the Ad Hoc Group).
The effect of the proposed amendments to the Restricted Payments covenant is two-fold: (i) the amendments to the definition of "Consolidated Net Income" set out in paragraph (b) on page 27 of the Amended and Restated Memorandum have the effect of substantially inflating the Consolidated Net Income compared to how it is calculated under the existing Indenture provisions, and (ii) the amendments to Section 4.06 of the Indenture set out in paragraph (i) on pages 29 and 30 of the Amended and Restated Memorandum have the effect of permitting the Parent Guarantor and the Restricted Subsidiaries to make material Restricted Payments which are not permitted under the existing Indenture provisions.
In particular, the new additions to the definition of the Consolidated Net Income result in additional positive adjustments to the Consolidated Net Income for the year ended 31 December 2022 of approximately UAH 25.9bn and in additional positive adjustments for the six months ended 30 June 2023 of approximately UAH 4.0bn. The breakdown of the adjustments is set out below (with the new limbs of the Consolidated Net Income definition set out at rows (10) to (14)):
Year ended 31
6 months ended
(UAH millions, except as otherwise specified)
Profit/(loss) for the period
Consolidated Net Income adjustments:
(1) any net gain (or loss) realized upon the sale or other disposition of any asset, disposed
(2) any extraordinary or non-recurring gain, loss or charge
(3) net income of Restricted Subsidiaries not permitted to be distributed
(4) the net income or loss of any Person that is not a Restricted Subsidiary of the Parent
(5) any restoration to income of any contingency reserve
(6) non-cash gains or losses with respect to Hedging Obligations
(7) any goodwill or other intangible asset impairment charge
(8) any non-cash compensation charge arising from any grant of stock
(9) the cumulative effect of a change in accounting principles during such period
Total Consolidated Net Income adjustments under existing Indenture provisions
(10) non-cash foreign exchange gains or losses
(11) any property, plant and equipment impairment charge
(12) any income or charge attributable to a post-employment benefit scheme other than the
(13) the cumulative effect of a change in non-cash provision of expected credit losses
(14) the cumulative effect of depreciation, amortisation and depletion during such period
Total additional Consolidated Net Income adjustments under new Indenture provisions
Consolidated Net Income
Average UAH/USD exchange rate for the period
Consolidated Net Income (U.S.$ million)
As a result, immediately after implementation of the proposed amendments to the Indenture the Issuer would have the ability to make Restricted Payments (including dividend distributions) in the amount of approximately USD 493.5m if the Consolidated Leverage Ratio does not exceed 2.5 to 1.0 and USD 740.3m if the Consolidated Leverage Ratio does not exceed 2.0 to 1.0.
The Ad Hoc Group believes that the proposed amendments would be materially prejudicial to the interests of the holders of the Notes as it would allow the shareholder to receive substantial amounts from the Parent Guarantor prior to the repayment of the Notes.
As many investors will be aware, the Notes are the product of a distressed debt exchange conducted in 2021 (which itself followed a prior distressed debt exchange in 2017). The covenants of the Notes, including, in particular, limitations on restricted payments and the excess cash sweep mechanism, were negotiated by Noteholders in exchange for extensive concessions in payment terms provided to the Issuer. The Ad Hoc Group believes the current proposal vitiates these carefully negotiated protections and is substantially detrimental to the interests of Noteholders.
In light of the foregoing, the Ad Hoc Group is of the view that Noteholders should not vote in favor of the proposed amendments.
The Ad Hoc Group is proposing a call for noteholders at 2:30 pm (London time) on 28 September 2023 to discuss the proposed amendments in the Amended and Restated Memorandum further.
Noteholders are invited to contact Solomon J. Noh, Alastair Goldrein or James Armshaw of CGSH if they would like the details to join the noteholder call or to discuss the contents of this press release.
The contact details for Messrs. Noh, Goldrein and Armshaw appear below:
Solomon J. Noh
Mobile: +44 (0) 78 4132 3679
Office: +44 (0) 20 7614 2322
Mobile: +44 (0) 77 3417 1953
Office: +44 (0) 20 7614 2216
Mobile: +44 (0) 75 8105 3809
IMPORTANT NOTICE: Neither any member of the Ad Hoc Group nor CGSH assumes duty of care to any holder of the Notes and nothing in this press release shall constitute an investment advice. Each holder of the Notes should seek independent legal, financial and tax advice before making any investment decision with respect to the Notes or any other financial instruments.
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SOURCE DTEK Energy B.V.
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