Akhmetov’s energy company DTEK suspends debt payments due to COVID-19

The largest energy producer in Ukraine, DTEK Energy, will miss its upcoming interest payments on debts due to the COVID-19 pandemic and seek to restructure its loans, the company said on March 27.

DTEK, which is owned by billionaire oligarch Rinat Akhmetov, said that the COVID-19 pandemic, and measures to contain it, caused financial pressure on the company.

As of the morning of March 28, eight people died from COVID-19, and 311 cases were confirmed. The country is currently under a quarantine whose restrictions on movement and travel will be reviewed on April 24.

DTEK said that due to the pandemic it will not pay the interests on the eurobonds and its bank loans, due on March 31-April 1.

“DTEK Energy is in the process of developing a standstill and debt restructuring proposal with respect to its 10.75% Senior PIK Toggle Notes due 2024 and certain bank indebtedness,” DTEK’s statement says. “Consequently, the interest coupon due on the Notes on April 1, 2020, will not be paid on April 1, 2020, and interest on the Bank Debt will not be paid on March 31, 2020.”

The energy giant will prepare its proposal on how and when it will pay back to the lenders “in due course.”

“DTEK Energy asks the investment community to support the company in pursuing this difficult decision. Today, it is critical to stand firm and united in the fight against COVID-19 pandemic,” the statement says.

DTEK group enterprises continue working even under lockdown, according to the company. It launched “a special operating regime” which provides that all critical staff have been isolated in quarantine zones of the plants. Some of the employees work remotely.

The decision to default on loans comes in stark contrast to the company’s recent financial success.

For several years, DTEK Energy was benefitting from an infamous coal pricing scheme known as “Rotterdam Plus,” which ended in 2019. Meanwhile, its sister company within the same holding, DTEK Renewables, has been benefitting from the lucrative “green tariff” that has the state buying renewable energy from companies at the highest prices in Europe, the system that Ukraine’s government is seeking to end.

In the first six months of 2019, DTEK Energy reported a net profit of Hr 3.3 billion ($118 million).

The net worth of its owner, Akhmetov, stands at $2.8 billion, according to Forbes magazine.

The billionaire made the news recently when his company bought a luxurious 200-million-euro villa on French Riviera on Jan. 27. Villa des Cèdres, an 18,000-square-foot mansion on the Mediterranean coast once belonged to Belgium’s King Leopold II and used to be known as the most expensive house in the world.

Akhmetov also owns a £137-million flat in London’s One Hyde Park, which at the time when he bought it, in 2011, was the highest price ever paid for a UK residence.