NOTEHOLDER UPDATE IN RELATION TO UKRENERGO

US$825,000,000 6.875% GUARANTEED SUSTAINABILITY-LINKED GREEN NOTES DUE 2028 (THE "NOTES")

ISSUED BY PRIVATE JOINT STOCK COMPANY "NATIONAL POWER COMPANY "UKRENERGO"" (THE "COMPANY")

LONDON, Nov. 8, 2024 /PRNewswire/ -- Cleary Gottlieb Steen & Hamilton LLP are working with a group of significant holders of the Notes (the "Ad Hoc Group" or "AHG").

The circumstances of the Company's announcement on 6 November 2024 (the "Announcement") that it will suspend payments under the Notes including the scheduled interest payment due on 9 November 2024 give rise to a number of concerns.

First, notwithstanding the clearly stated intent of the Government of Ukraine ("GoU") (which acts as guarantor under the Notes) to engage in discussions with holders of the Notes upon the conclusion of Ukraine's sovereign debt restructuring in August, no such discussions ever took place.  Whilst the Ad Hoc Group clearly communicated to the GoU and the Company its readiness to engage, neither the GoU nor the Company at any point demonstrated actual preparedness to enter into a non-disclosure agreement or conduct discussions with the AHG.

Second, the corporate governance issues surrounding the Company, which have been noted with concern by many of Ukraine's stakeholders and foreign partners, appear to continue unabated. The Announcement attributed the suspension of payments on the Notes to a decision of the Ministry of Energy of Ukraine.  Proper adherence to corporate governance would dictate that any such decision should have been taken only by the Company's management and supervisory boards. The AHG notes recent commentary by market participants suggesting Noteholders might be requested to consent to a removal of the GoU guarantee on the Notes as part of a future restructuring.  Without pre-judging the substance or nature of proposal which may be made by the Company, the continued exercise of corporate governance functions by the GoU underscores the responsibility of the GoU for the Company's treatment of its Noteholders.

Third, holders of the Notes already made substantial concessions in the 2022 debt deferral. Since that deferral the Company has made no payments on the Notes, which the Company itself acknowledges in the Announcement has contributed meaningfully to its financial resilience for the past two years. During this same period, the Company has continued to promptly service its other commercial indebtedness (including interest and principal payments of $221 million and $156 million, respectively).  In this context, the announced suspension of payments under the Notes (including the scheduled $28 million semi-annual coupon coming due on 9 November 2024) appears particularly regrettable. It should be noted that the Notes rank pari passu with, and are not subordinated to, the other debts the Company has continued to service.

Whilst the AHG welcomes the Company's intention to engage with it in the near future, the AHG does not consider the suspension of payments under the Notes without any prior engagement with Noteholders to be conducive to achieving the consensual solution the Company claims to want. In this context, the AHG has no other choice but to reserve all of its rights in relation to any default under the Notes whether in relation to the Company's failure to make the interest payment due on 9 November 2024 or otherwise.

The AHG remains fully supportive and committed to Ukraine, and Ukraine's defense of its freedom and territorial integrity in the wake of the Russian invasion.  It is also the view, however, of the AHG and many in the investment community that upholding and honouring commercial relationships to the fullest extent possible under the current circumstances is the best way to ensure (i) the long-term continuity of capital markets funding for Ukrainian borrowers and (ii) that Ukraine's economy adjusts as rapidly as possible to new circumstances.

Holders of the Notes are invited to contact Alastair Goldrein or James Armshaw of Cleary Gottlieb Steen & Hamilton LLP for further information.

The contact details for Messrs. Goldrein and Armshaw appear below:

SOURCE Ad Hoc Group of Ukrenergo Bondholders

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