BEH: The dismissal of the management creates impossibility to pay the bond issue of 550 million euros

The dismissal of the management of Bulgarian Energy Holding EAD creates an impossibility to make a payment on a bond issue maturing on 02.08.2021 in the amount of EUR 550 million. This is stated in a press release of the Bulgarian Energy Holding (BEH). As it is known earlier today, the Minister of Energy from the caretaker cabinet Andrey Zhivkov released the management of the holding.

Just a few days ago, on July 15, BEH placed its fourth issue of Eurobonds in the amount of EUR 600 million at an annual interest rate of 2.45%.

Now the energy holding is commenting that the dismissal of the management actually threatens the deal.

Today, with a decision under Protocol №Е-26-Б-456 of 23.07.2021 of the Minister of Energy, the members of the Board of Directors of Bulgarian Energy Holding EAD (BEH EAD) are dismissed, as it is explicitly mentioned that from the date of issuance of the above-mentioned protocol, their powers under the contracts for assignment of management shall be terminated.

It should be borne in mind that BEH EAD is an issuer of an issue of Eurobonds with a total value of EUR 550,000,000, maturing on 02.08.2021. On the due date, the interest due for the last year of total value should be paid. 26,812,500 euros. Thus, the total amount due to be paid is 576,812,500 euros, the statement said.

At present, the funds necessary for debt repayment are available on the account of BEH EAD in the Bulgarian Development Bank, and in order to be transferred to the account of the Paying Agent - Citibank London, the same should be ordered on 28.07.2021 with payment document by an authorized person. The payment document is necessary for the servicing bank to make the transfer of the funds and the maturity date of 02.08.2021 and for these funds to be transferred by the Paying Agent to the investors holding bonds of BEH EAD from the one placed in 2016 bond issue.

In case the funds are not transferred to the investors on the maturity date of 02.08.2021, for any reason, there is a risk of declaring pre-term demandability on the other two bonds with a total value of EUR 1,200 million, formed as follows: EUR 600 million due on the bond placed in 2018 and another EUR 600 million on the bond placed in 2021. In addition to the principal, investors have the right to file a claim for early repayment of interest due.

This will lead to insolvency of BEH EAD, which will have a detrimental effect on the financial condition of all state energy companies and will jeopardize their normal functioning. Given the fact that the companies in the structure of BEH EAD manage assets that are classified as objects of the country's critical energy infrastructure, any action that would jeopardize their future operation will lead to a violation of the country's energy and national security, it is said already in the opinion of BEH.