March 1, 2010 / 5:09 PM / 7 years ago

Ukraine state telco in deal to delay debt payment

2 Min Read

KIEV, March 1 (Reuters) - Ukrainian state telecommunications firm Ukrtelekom has reached agreement with Deutsche Bank, Credit Suisse and Standard Bank to delay payment of par of its $500 million loan, it said on Monday.

Ukrtelekom, the dominant fixed-line operator that had been slated for privatisation for years, became the third state-owned firm that sought to restructure its foreign debt along with energy company Naftogaz and the railways operator.

Ukrtelekom said it agreed to repay $41.7 million of the debt by May 25, past a Feb. 25 deadline.

The restructuring was far smaller than that of Naftogaz, which swapped its foreign debt for a new $1.6 billion Eurobond. The state railways operator is still in talks to change the terms of a $550 million syndicated loan.

Ukrtelekom's initial public offering had been delayed by political wrangling and infighting. Estimates for its value have swung anywhere from $1 billion to $3 billion.

The company has been helped by the state by holding the only 3G license, but is weak in the mobile market against competitors such as Russian MTS MTSI.MM and Kyivstar, controlled by Russia's Alfa Group and Norway's Telenor (TEL.OL).

Analysts and investors worried all last year that Ukraine was on the verge of a sovereign default. Although the state never did delay debt repayments, the technical default of Naftogaz proved some of those fears right.

Despite implicit guarantees, none of the restructured loans were found to actually have a state guarantee, which meant that negotiations did not translate into a sovereign default. (Reporting by Yuri Kulikov; writing by Sabina Zawadzki; editing by Jeffrey Benkoe)

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