Clifford Chance advises Citigroup on its US$494.75million debt-for-reconstruction swap for National Power Company Ukrenergo

Global law firm Clifford Chance has advised Citigroup on a first of its kind US$494.75million debt-for-reconstruction swap for National Power Company Ukrenergo and its guarantor, Ukraine. The transaction allowed Ukrenergo and Ukraine to resolve Ukrenergo’s outstanding defaulted eurobond whilst also generating savings committed to the reconstruction and modernisation of Ukraine’s power grid.

The transaction involved the exchange of Ukrenergo’s existing $825million eurobond for a mix of cash and new unguaranteed Ukrenergo bonds on terms agreed with existing noteholders, using funds provided by new investors in a series of U.S.$494,750,000 Secured Reconstruction Notes underwritten by Citigroup and issued by Mavka Finance DAC. Ukrenergo’s existing eurobond and Ukraine’s sovereign guarantee were amended and restated and delivered to Mavka Finance as consideration and collateral for the new funding. The Reconstruction Notes benefit from a political risk insurance policy provided by the United States International Development Finance Corporation, a US federal agency, provided to Mavka Finance.

Deborah Zandstra, partner who led the Clifford Chance team, said: “This important transaction is a significant innovation in the use of a debt conversion structure to facilitate the restructuring of existing debt and provide much needed private sector financial support for Ukraine’s energy sector.”

The global cross-practice Clifford Chance team was led by partners Deborah Zandstra and Jonathan Zonis, senior associates James Kelton and Sophie Wilkinson, associates Alexandra Machado and Bailey James, law clerk Natalie Deradi and trainee solicitors Sam Jewell, Haylee Cheam and Yasmin Tajalli. The wider team included Marie Berard, Caroline Dawson, Cameron Dwyer, Avrohom Gelber and Tom Dyer, among others. The trustee, The Bank of New York Mellon, London Branch, was advised by Bruce Kahl and Andy Whelan.