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Публікації

18 січня 2012

Розміщення єврооблігацій українськими емітентами


Автор: Армен Хачатурян, Олексій Дем'яненко
Джерело: Financier Worldwide. – 2012. – січень

Статтю можна прочитати нижче мовою оригіналу.

Placement of Eurobonds by Ukrainian issuers

Although Ukrainian securities legislation has substantially improved in recent years, placement of bonds by a Ukrainian issuer on foreign stock exchanges remains poorly regulated. This article is a short overview of the Eurobond structures available for companies incorporated in Ukraine.

Direct issuance

Over the past decade there have been several attempts by the Ukrainian State Commission on Securities and Stock Market (‘SEC’) to initiate a reform of Eurobond regulation in Ukraine. Regretfully, these efforts have not really achieved their goal, resulting in the abolishment, effective from 3 May 2006, of the requirement to denominate corporate bonds in Ukrainian currency only in the Law on Securities and Stock Market. However, the relevant provision remains in the Commercial Code of Ukraine, which was not amended in this respect. In addition, there is onerous and impractical regulation on circulating Ukrainian corporate bonds abroad. Consequently, a direct issuance of debt securities on foreign capital markets is still legally impossible for Ukrainian issuers.

Nevertheless, there was one direct bond issuance carried out in 2009 by the state-owned company Naftogaz in connection with its debt restructuring and based on the SEC's special resolution allowing Naftogaz to issue foreign debt securities governed by foreign law outside of Ukraine. This decision was part of the restructuring requirements for the government to grant security for Naftogaz's obligations to bondholders. It should be noted, however, that this transaction remains an exception, based to a great extent on political reasons and is questionable from a legal perspective.

Indirect issuance

Due to legal problems with direct issuances of securities abroad, the majority of Ukrainian corporate Eurobond placements prior to and following the 2009 Naftogaz transaction were structured as limited recourse LPN offerings relying on Rule 144 A and/or Regulation S under the US Securities Act of 1993, involving a non-Ukrainian SPV/issuer on-lending proceeds raised from the sale of bonds to a Ukrainian fundraiser. In this case the issuance of debt securities is conducted by a company incorporated outside of Ukraine, the offering is not regulated by Ukrainian law and therefore does not require the SEC's approval.

A number of structures for Ukrainian Eurobonds included security in the form of suretyships granted by Ukrainian affiliates of the issuer. These suretyship arrangements encounter the following Ukrainian legal issues.

Obtaining an individual licence. On 15 November 2010 the National Bank of Ukraine ('NBU') issued an official clarification letter (the 'Letter') regarding the currency restrictions applicable to payments by Ukrainian sureties and guarantors to foreign creditors under a guarantee (garantiya) or suretyship (poruka) agreement. In the Letter the NBU explained that in order to make a payment to a foreign creditor a Ukrainian surety must obtain an individual licence from the NBU unless the surety is an authorised bank or financial institution. At the same time Ukrainian banks can make payments as guarantors or sureties without an individual licence. Non-banking financial institutions do not need an individual licence for such payments if they have a general licence for transactions with foreign currency. Currently such licences are effective for only up to 90 days. Consequently, as a practical matter in most situations an individual licence cannot be obtained in advance on the execution of the suretyship and would have to be obtained at the time of payment.

Obtaining a price evaluation. It is not absolutely clear under Ukrainian law whether payments by Ukrainian sureties are subject to mandatory price evaluation under the NBU resolution No. 597 of 30 December 2003. Absent official regulatory interpretation, in an ad hoc letter of 1 October 2010 (which is not formal clarification under Ukrainian law) the NBU explained that no such price evaluation is necessary for payments under surety contracts.

Purchasing foreign currency. Under Ukrainian exchange control regulations, a Ukrainian resident is prohibited from purchasing foreign currency in order to discharge its obligations under a suretyship securing obligations of a foreign debtor. Accordingly, obligations under the deed of surety may be fulfilled only by the company's own hard currency funds.

Complying with anti-money laundering legislation. Pursuant to Resolution No. 5555 of the State Commission of Ukraine for Regulation of Financial Services Markets, dated 31 March 2006 and effective from 6 May 2006 ('Resolution No. 5555'), non-financial institutions may act as sureties subject to their compliance with applicable anti-money laundering regulations. Resolution No. 5555 may be interpreted as generally imposing on non-financial institutions acting as sureties the obligation to comply with the financial monitoring requirements and their failure Placement of Eurobonds by Ukrainian issuers to comply with such requirements may result in the imposition of fines.

The risk of invalidating the deed of surety due to such failure appears to be rather hypothetical but may not be completely removed absent official clarification and established court practice on this matter.

Gross-up clause

Ukrainian tax legislation explicitly prohibits gross-up clauses, which require the borrower to compensate the lender for any withholding or other taxes which may be associated with the payment of interest to a non-resident. The NBU refuses the registration of loans containing such provisions.

Beneficial ownership concept

Under Ukrainian tax law, a foreign lender is subject to a 15 percent withholding tax on income derived in Ukraine as interest under a loan to a Ukrainian borrower, provided that such income is not attributable to a permanent establishment of the lender in Ukraine, and unless the provisions of the applicable tax treaty between Ukraine and the lender's jurisdiction provide otherwise. Under the applicable treaty between Ukraine and the respective state on the avoidance of double taxation, the rate of taxation of interest received by the qualifying lender under the loan may be reduced or brought down to 0 percent.

Adopted on 2 December 2010 and effective in major parts from 1 January 2011, the Tax Code of Ukraine (the 'Tax Code') introduced the concept of beneficial ownership, i.e., a non-resident acting as agent, nominee holder or intermediary in respect of Ukrainian-sourced income (including interest under the loan) would not qualify as the beneficial owner of such income and, consequently, is not entitled to double tax treaty benefits, if any. Notably, the concept targets the application of reduced rates of the withholding tax.

These changes have a profound impact on Eurobond projects, where proceeds from the offering are channelled to Ukraine under the loan agreement. The principal and interest repaid by the borrower are further transferred by the issuer (loan grantor) to the wide range of bondholders (ultimate recipients of funds) located in different jurisdictions.

The concept of a beneficial owner is rather underdeveloped in Ukraine. Despite the fact that similar provisions regarding beneficial owners are contained in double tax treaties concluded by Ukraine years ago, before the adoption of the Tax Code, the tax authorities rarely applied this concept in practice and there is no available interpretation of this provision, resulting in uncertainty in the application of double tax treaty benefits.

Status of lender

Effective from 1 January 2004, the Commercial Code of Ukraine provides that Ukrainian companies “may draw foreign currency loans from foreign financial institutions”. Under an adverse interpretation of this requirement, only foreign financial institutions may provide loans to Ukrainian entities. As a result, there is a risk of invalidation of a loan received from a lender that is not a bank or a financial institution. At the same time Ukrainian civil law distinguishes between 'loans' (kredyty) and 'borrowings' (pozyky). Under the Civil Code of Ukraine, a 'loan' is provided by a bank or other financial institution, which is consistent with the above-noted restriction under the Commercial Code, while a 'borrowing' is not subject to such restriction. Thus, it can be argued that Ukrainian legislation allows Ukrainian entities to receive funds from lenders that are non-financial institutions pursuant to agreements on borrowing.

To conclude, we would like to stress that Ukrainian legislation contains a number of onerous provisions which should be considered by companies raising debt finance on international capital markets. Eurobond offerings remain a viable alternative to bilateral and syndicated loans.



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