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DTEK Energy temporarily shuts mines, aims to restructure debt in two months

April 15, 2020 | Cbonds

Ukraine’s leading coal and power company DTEK Energy (DTEKUA) has decided to halt temporarily as of Apr. 20 its coal mining operations at Pavlohrad Coal, its biggest and only operational coal company, DTEK Group CEO Maxim Tymchenko told an online press briefing on Apr. 14. He said that such a measure is needed to save costs amid the tough situation on the energy and coal markets in Ukraine. Recall, in late March, DTEK Energy reported on the closure of two smaller coal mining assets.

Pavlohrad Coal is Ukraine’s biggest producer of steam coal. In 2019, it mined 18.2 mmt of ROM steam coal, or 73% of Ukraine’s total.

Meanwhile, DTEK Energy expects to complete its debt restructuring in 1.5-2 months, Tymchenko said on Apr. 14. He also said that DTEK Renewables (DTEREN), an asset of DTEK Group, is not going to initiate debt restructuring talks, providing there will be no radical changes in the regulation of renewable energy.

Alexander Paraschiy: The consumption of hard steam coal by DTEK Energy’s thermal power plants fell 31% yoy in 1Q20. In March, the decline was 27% m/m and 36% yoy, which is a consequence of reduced demand for electricity due to the coronavirus lockdown and a seasonal increase in the supply of renewable energy. In the first two weeks of April, consumption dropped further by about 15% m/m. That statistics show that a temporary shutdown of coal mining by DTEK is a reasonable solution.

For the future, DTEK will likely revise its coal mining plans and not reopen its smaller mines, for cost-cutting purposes. It seems like the situation on the energy market won’t be beneficial for DTEK’s thermal power plants in the short-term future. Meanwhile, we look forward to seeing more information from DTEK Energy on the process of negotiations with its creditors, as well as its outlook on operations and the regulatory environment.

Issue: DTEK Energy, 10.75% 31dec2024, USD

StatusDefaultCountry of riskMaturity (option)AmountIssue ratings (M/S&P/F)
outstandingYesUkraine12/31/20241,343,717,150 USD-/-/C

Company: DTEK Energy

Full company nameDTEK Energy BV
Country of riskUkraine
Country of registrationNetherlands
IndustryPower

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