A struggling finance company, which encountered a perfect storm when Ukraine’s currency was dramatically devalued on the outbreak of war, has enlisted the aid of the High Court in its attempt to restructure itself and avoid insolvency.
The company was engaged in raising funds on the capital markets for a power conglomerate in Ukraine, of which it was a subsidiary. It had issued loan notes in 2010 with a face value of $500 million, and bearing interest of 9.5 per cent annually. $200 million of those notes were due to mature at the end of April 2015.
The company had suffered financial difficulties due to the war and the resulting 62 per cent devaluation of the Ukrainian currency, the hryvnia, against the dollar. It earned its revenue in hryvnias but had to service its borrowing in either dollars or euros. As a result it did not have the funds to redeem the loan notes on the due date.
With the support of investors who held the notes, the company put forward a scheme of arrangement which would ward off the threat of imminent insolvency. The Court approved the scheme, by which the outstanding notes would be cancelled. The holders would receive 20 per cent of their value in cash and the remaining 80 per cent in the form of new notes with a 2018 maturity date.