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. Last Updated: 07/27/2016

Naftogaz Eurobond Debt Will Be Restructured

KIEV — Investors have agreed to restructure troubled Ukrainian energy company Naftogaz's $500 million eurobonds debt issue, a company official and an investor group said Friday.

The cash-strapped, state-owned company had failed to redeem the bonds by the Sep. 30 deadline, effectively defaulting on them, but creditors had been widely expected to agree to its belated restructuring proposal.

Acceptance of the plan came in a vote late Thursday, Naftogaz spokesman Valentyn Zemlyansky told The Associated Press. He gave no details, saying only that the outcome was "positive."

Alexei Olshansky, spokesman for a group of investors holding about 20 percent of the eurobonds, confirmed that they have voted in favor of the offer.

Naftogaz had proposed converting the existing bonds into new ones that will mature in five years and increasing the interest rate from the current 8.125 percent to 9.5 percent. The proposal offers explicit state guarantees for the bonds.

Naftogaz is responsible for transporting Russian natural gas to European consumers via pipelines crossing Ukraine, and past debt problems have contributed to supply disruptions. In January, millions of Europeans were left freezing for two weeks after Russian monopoly Gazprom shut off the taps to Ukraine, accusing its neighbor of stealing gas.