THIS ANNOUNCEMENT DOES NOT CONSTITUTE A SOLICITATION OF AN OFFER TO SELL OR RECOMMENDATION TO PURCHASE THE SECURITIES REFERRED TO IN THIS ANNOUNCEMENT OR ANY OTHER SECURITIES IN THE UNITED STATES OR ANY OTHER JURISDICTION. THE CONSENT SOLICITATION IS NOT BEING MADE, AND THIS ANNOUNCEMENT SHALL NOT BE RELEASED, PUBLISHED OR DISTRIBUTED, IN OR INTO, OR TO ANY PERSON LOCATED OR RESIDENT IN, ANY JURISDICTION IN WHICH SUCH SOLICITATION OF CONSENTS IS NOT IN COMPLIANCE WITH THE LAWS OR REGULATIONS OF SUCH JURISDICTION AND IN WHICH IT IS UNLAWFUL TO RELEASE, PUBLISH OR DISTRIBUTE THIS ANNOUNCEMENT OR THE CONSENT SOLICITATION MEMORANDUM (AS DEFINED BELOW).

28 July 2022

ANNOUNCEMENT of Consent Solicitation

by

PRIVATE JOINT STOCK COMPANY "NATIONAL POWER COMPANY "UKRENERGO" ("Ukrenergo")

in respect of

U.S.$825,000,000 6.875 per cent. Guaranteed Sustainability-Linked Green Notes due 2026, issued by Ukrenergo (Regulation S ISIN: XS2404309754, Common Code: 240430975; Rule 144A ISIN: US63718LAA26, CUSIP: 63718LAA2) (the "Securities")

Ukrenergo announced today a solicitation of consents (the "Consent Solicitation") of holders of the Securities (the "Holders") to consider, and if thought fit, to pass a Multiple Series Two Limb Written Resolution as defined in and pursuant to Condition 12(d) (Multiple Series Aggregation - Two limb voting) of the Conditions (the "Written Resolution") to approve the Proposed Modifications (as defined and set out below) (the "Proposal").

This announcement does not contain the full terms and conditions of the Consent Solicitation, which are contained in the consent solicitation memorandum dated 28 July 2022 (the "Consent Solicitation Memorandum") prepared by Ukrenergo. Eligible Holders (as defined below) may obtain a copy of the Consent Solicitation Memorandum via the Consent Website https://projects.morrowsodali.com/Ukrenergo operated by Morrow Sodali Limited (the "Information and Tabulation Agent"), the contact details for which are set out below. In order to receive a copy of the Consent Solicitation Memorandum, a Holder will be required to provide certain confirmations as to his or her status as an Eligible Holder. Holders are advised to read the Consent Solicitation Memorandum carefully. Terms used and not defined in this announcement have the meanings given to such terms in the Consent Solicitation Memorandum.

The Consent Solicitation will expire at 5:00 p.m., New York City time, on 9 August 2022 (such time and date, as the same may be extended or earlier terminated, the "Expiration Time"). Ukrenergo reserves the right to, in its sole discretion, waive or modify any term of, or to terminate, the Consent Solicitation for any reason prior to the Expiration Time.

Background and Purpose of the Consent Solicitation

Ukraine has been invaded by the armed forces of the Russian Federation and is a country at war.  Since 24 February 2022, Russia has conducted a campaign of military attacks by sea, air and land across Ukraine, targeting essential civilian and industrial infrastructure and residential areas as well as military sites.  Towns and cities across Ukraine have been, and continue to be, subjected to indiscriminate and intensive bombardment by Russian armed forces. Substantial areas of Ukrainian territory are under de facto temporary occupation by Russian armed forces. The armed forces of Ukraine are resisting the invasion.

The broad scale and intensity of Russia's unprovoked attack, unprecedented in Europe since the end of World War II, has created an enormous economic, humanitarian and refugee crisis in Ukraine.  The Government, including the Parliament, continues to fulfil its normal functions notwithstanding the war, although martial law is in force across the country. 

The Russian invasion of Ukraine poses extraordinary risks to Ukraine's economic, financial and social fabric and to its territorial integrity. The disruption to fiscal cash flows and increased demands on government resources caused by the war has created unprecedented liquidity pressures and debt servicing difficulties for the Government.  It has been a continuous challenge finding adequate funding sources for Ukraine to cover critical defence, social and humanitarian costs, and to begin planning for post-war reconstruction of the country.

In the context of managing Ukraine's public external debt obligations and liquidity pressure, Ukraine, the guarantor of the Securities, is currently seeking the consent of holders of (i) its outstanding eurobonds (the "Eurobonds") pursuant to a separate consent solicitation (the "Eurobond Consent Solicitation") as set out in a consent solicitation memorandum dated 20 July 2022, as amended on 22 July 2022 (the "Eurobond Consent Solicitation Memorandum") to certain proposed modifications to the terms and conditions of the Eurobonds (the "Eurobonds Proposed Modifications") and (ii) its U.S.$3,239,320,000 GDP-linked Securities (the "GDP-linked Securities"), pursuant to a separate consent solicitation (the "GDP-linked Securities Consent Solicitation")  as set out in a separate consent solicitation memorandum dated 20 July 2022, as amended on 22 July 2022 (the "GDP-linked Securities Consent Solicitation Memorandum") to certain proposed modifications to the terms and conditions of the GDP-linked Securities. The Eurobond Consent Solicitation Memorandum and the GDP-linked Securities Consent Solicitation Memorandum may be obtained from the consent websites operated by the Information and Tabulation Agent: https://projects.morrowsodali.com/Ukraine and https://projects.morrowsodali.com/Ukrainewarrants, respectively. 

As a result of the Russian invasion, the Ukrainian electricity industry witnessed a substantial performance drop, with electricity consumption declining by approximately 30 per cent. compared to the pre-war levels, driven by the temporary occupation of a part of the Ukrainian territory, over five million Ukrainians leaving the country since the onset of the hostilities, as well as the suspension or slowdown of operating activities by many businesses throughout Ukraine. In addition, Ukrenergo's cash collection rates have also dropped, with approximately 50 per cent. of invoices paid for transmission services and approximately 22 per cent. of invoices paid for dispatching services in June 2022, compared to approximately 93 per cent. and 94 per cent., respectively, in January 2022, before the invasion. This has had a direct impact on Ukrenergo's financial performance.

A share of Ukrenergo's assets is located in temporarily uncontrolled territory of Ukraine, comprising about 20 per cent. based on their carrying value and about 15 per cent. based on the length of transmission lines and the number of electricity substations. Some of these assets have been disconnected from Ukraine's energy system, making it impossible to assess the status of these assets due to lack of access. The percentage of destroyed or damaged assets of the Group as a result of hostilities and missile strikes (where such impact can be registered by Ukrenergo) does not exceed 5 per cent. of the total carrying amount of Ukrenergo's assets. Ukrenergo's repair crews and contractors continue repairing impacted electricity infrastructure and other assets, and the Group has already repaired 100 per cent. of the main electricity networks damaged by shelling in deoccupied territories of northern Ukraine.

Ukrenergo, being the national power company responsible for the operational and technological control functions of the Integrated Power System of Ukraine, faces unprecedented challenges in maintaining and rebuilding the country's power network at this time of war, as well as ensuring Ukraine's integration into the energy network of continental Europe, ENTSO-E, and expanding Ukraine's export and import capabilities.

Ukrenergo is requesting that Holders approve the Proposed Modifications on substantially similar terms as those proposed by Ukraine, the Guarantor under the Securities, in connection with its Eurobond Consent Solicitation.

The Proposal provides Ukrenergo with relief from liquidity outflows in connection with debt service obligations under the Securities for twenty-four months, enabling it to focus its available financial resources on necessary efforts to rebuild and maintain the power network in Ukraine. Given the large amounts of emergency budget support currently being provided by Ukraine's international partners to enable the Government to finance its core responsibilities, Ukrenergo believes it is no longer appropriate or sustainable for it to continue servicing external debt by making cash payments. At this time of crisis, it is key for Ukrenergo to preserve liquidity and prioritise expenditures vital for the security of the Integrated Power System of Ukraine, the uninterrupted performance of the functions of the transmission system operator and integration into ENTSO-E.

Ukrenergo is also requesting that Holders approve certain changes related to the sustainability-linked elements of the Securities. Some of the Group's (as defined below) fixed assets were damaged or destroyed because of Russian hostilities and missile strikes. In addition, part of the Group's network of transmission lines and substations is located in the temporarily occupied territories and has been disconnected from the energy system. It is not possible to assess the status of these assets due to lack of access to them, and the Group cannot obtain economic benefit from them. Therefore, Ukrenergo is no longer able to collect reliable data to comply with its reporting obligations and no longer has visibility as to whether it would be able to stay on track to satisfy either or both of the Renewable Energy Installed Capacity Condition and the Renewable Energy Installed Capacity Percentage Condition (each as defined in the Conditions) by 31 December 2024 as currently envisaged by the Conditions.

Furthermore, the war has already had and will no doubt continue to have a detrimental impact on the Renewable Energy Installed Capacity and Total Installed Capacity (each as defined in the Conditions). In addition, while it is difficult to assess and forecast the war's impact on the growth of the renewable energy sector in Ukraine, it is already clear that it will not be able to develop at the pace forecasted before the war, and a number of renewable projects initially planned might not materialise within the originally envisaged periods of time or at all. Current Adjustment Events in the Conditions do not allow Ukrenergo to adjust the Renewable Energy Installed Capacity Threshold and the Renewable Energy Installed Capacity Percentage Threshold (each as defined in the Conditions) to reflect the impact of war. Therefore, Ukrenergo, is requesting that Holders approve the deferral of the reporting and testing dates and the introduction of a war-related Adjustment Event, without any minimum required net change threshold. The war-related Adjustment Event will allow Ukrenergo to adjust not only for the potential loss of Renewable Energy Installed Capacity in the country, but also importantly the inability of Ukrenergo and Ukraine to pursue the renewable energy expansion strategy as was originally envisaged before the war.

Summary of the Consent Solicitation and the Proposal

Pursuant to the Consent Solicitation, as more fully described in the Consent Solicitation Memorandum, Ukrenergo is soliciting the consent of Holders to amend the terms of the Conditions of the Securities to approve, among other things, the matters set out below by the Written Resolution (the "Proposed Modifications"):

1.         defer the maturity date to 9 November 2028 (the "Deferred Maturity Date");

2.         defer to the Deferred Interest Payment Date (as defined below), any interest payment in respect of the Securities (the "Interest Deferral" and together with the maturity date deferral set out in paragraph (1) above, the "Deferral") falling due from (and including) 9 November 2022 to (but excluding): (i) 9 November 2024, or (ii) any earlier date notified to Holders (in accordance with Condition 14 (Notices) on which the Deferred Interest (as defined below) is paid in full in relation to the Securities (such date, the "Deferred Interest Payment Date" and such period, the "Deferral Period"), without any grace period applicable thereafter.

Any interest payment not paid on any Interest Payment Date falling during the Deferral Period shall itself bear interest at the applicable fixed rate (together, the "Deferred Interest"). Deferred Interest shall be paid on the Deferred Interest Payment Date upon the expiry of the Deferral Period, provided that Ukrenergo has the right to (i) partially prepay the Deferred Interest at any time during the Deferral Period and (ii) instead of paying the Deferred Interest on the Deferred Interest Payment Date, on and effective as of the Deferred Interest Payment Date, increase the aggregate principal amount of the Securities outstanding through the issuance of further Securities in the amount equal to the remaining Deferred Interest (the "Additional Securities"), following which the Securities will bear interest at the Rate of Interest on such increased aggregate principal amount from and including the Deferred Interest Payment Date;

3.         amend Condition 3(c) (Renewable Energy Reporting; Trigger Event; Threshold Adjustment) such that (i) the relevant testing and reporting dates for the Renewable Energy Installed Capacity and the Renewable Energy Installed Capacity Percentage (each as defined in the Conditions) shall each be deferred by a period of twenty-four months, (ii) the Step-Up Coupon Date (as defined in the Conditions) shall be deferred by twenty-four months, to 9 May 2027 and (iii) the definition of Adjustment Event (as defined in the Conditions) allows Ukrenergo to adjust the Renewable Energy Installed Capacity Threshold and/or the Renewable Energy Installed Capacity Percentage Threshold to account for the impact of the war, including the Russian invasion;

4.         waive any breach or any alleged breach whatsoever of any obligation, or any default or any alleged default whatsoever, under or in respect of the Securities, the Conditions, the Deed of Covenant, the Agency Agreement or the Deed of Guarantee that may occur or may be capable of occurring by the threat of, in anticipation of, in connection with, or as a result of, the Deferral;

5.         amend each of  Condition 8(c) (Indebtedness) and Condition 8(e) (Moratorium) of the Conditions such that they exclude any default or breach in relation to any failure by Ukraine to pay any interest, principal or any other amounts due on, or a suspension of payments on (as applicable), (i) any series of Eurobonds for which the Requisite Consents are obtained and accepted at or prior to the Expiration Time in each case during the relevant Deferral Period (each as defined in the Eurobond Consent Solicitation Memorandum) and (ii) any series of Eurobonds for which the Requisite Consents are not obtained at or prior to the Expiration Time (each as defined in the Eurobond Consent Solicitation Memorandum); and

6.         all other such modifications to the Conditions, the Deed of Covenant, the Agency Agreement or the Deed of Guarantee as are necessary for or expedient to effect the Deferral and the amendments, waivers and authorisations set out in paragraphs (1), (2), (3), (4) and (5) above.

Condition 12(a)(ix) of the Conditions allows for the Securities to be aggregated with other debt securities of Ukraine, the guarantor of the Securities, for purposes of passing the Written Resolution. Pursuant to Condition 12(a)(ix) of the Conditions, the consents of eligible holders of Eurobonds in relation to the relevant written resolutions to approve the Eurobond Proposed Modifications shall be counted for the purposes of determining whether the Requisite Consents (as defined below) have been reached in relation to the Written Resolution of Ukrenergo, provided that the relevant Requisite Consents (as defined in the Eurobond Consent Solicitation Memorandum) have been reached in relation to the Eurobond Proposed Modifications, the Eligibility Condition (as defined in the Eurobond Consent Solicitation Memorandum) has been satisfied, the Cross Condition (as defined in the Eurobond Consent Solicitation Memorandum) has been satisfied or waived by Ukraine and such Eurobond Proposed Modifications have become effective as further described in the Eurobond Consent Solicitation Memorandum. By submitting a Consent, Holders acknowledge and agree that for the purposes of the Consent Solicitation, the consents of Eligible Holders (as defined in the Eurobond Consent Solicitation Memorandum) of Eurobonds in relation to the Eurobond Proposed Modifications shall be counted for the purposes of determining whether the Requisite Consents have been reached in relation to the Written Resolution, subject to conditions described above.

The Proposed Modifications will become effective with respect to the Securities only if (i) valid Consents from (x) holders of at least 66⅔ per cent. of the aggregate principal amount of all the Eurobonds and Securities outstanding at the Record Date (taken in aggregate) and (y) Holders of more than 50 per cent. of the aggregate principal amount of the Securities outstanding at the Record Date  (together, the "Requisite Consents"), subject to re-designation (as set forth below), have been validly delivered prior to the Expiration Time and accepted pursuant to the terms of the Consent Solicitation Memorandum, (ii) the Eligibility Condition (as defined below) has been satisfied, (iii) the other conditions described in the Consent Solicitation Memorandum have been either satisfied or waived by Ukrenergo (in its sole discretion), and (iv) upon execution of the Amendment Documents.

The eligibility condition to the effectiveness of the Written Resolution, if passed, will be satisfied if the Requisite Consents for the Written Resolution is satisfied by Eligible Holders only, irrespective of any participation by Ineligible Holders (the "Eligibility Condition").

For the avoidance of doubt, consents to the Eurobond Proposed Modifications pursuant to the Eurobond Consent Solicitation are being taken into account for purposes of determining whether holders of at least 66²⁄₃ per cent. of the aggregate principal amount of all Eurobonds and Securities outstanding at the Record Date, taken together, have consented to the Eurobond Proposed Modifications and the Proposed Modifications, as applicable, pursuant to Condition 12(a)(ix) of the Conditions, provided, however, that no such consent provided by a holder of Eurobonds will be taken into account unless the Eurobond Proposed Modifications are effective.

For the avoidance of doubt, if Ukraine re-designates the series of Eurobonds that shall be aggregated for purposes of the Eurobond Proposed Modifications by excluding one or more series of Eurobonds, the same series of Eurobonds shall be excluded for purposes of determining whether the Requisite Consents have been reached.

Ukrenergo reserves the right in its sole discretion to reject any and all Consents with respect to the Securities.

Investor Call

Ukrenergo intends to conduct a call with investors at 3:30p.m. (London time) on Thursday, 28 July 2022 during which Ukrenergo will discuss the Consent Solicitation. Details of the call can be obtained from Rothschild & Cie, the financial advisor, at [email protected].

Overview Presentation

Ukrenergo, in conjunction with Ukraine, has prepared an overview of the Consent Solicitation, the Eurobond Consent Solicitation and the GDP-linked Securities Consent Solicitation (the "Overview Presentation"). The Overview Presentation is available on the Consent Website operated by the Information and Tabulation Agent.

Indicative Timetable

The following summarises the anticipated timetable for the Consent Solicitation.  Holders of the Securities should take note of the dates and times set forth in the schedule below in connection with the Consent Solicitation.  This summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing in the Consent Solicitation Memorandum and may be changed by Ukraine in accordance with the terms and conditions of the Consent Solicitation. 

Holders are advised to check with any broker, dealer, bank, custodian, trust company or other nominee or intermediary through which they hold Securities to confirm whether such intermediary requires to receive instructions to Consent before the deadlines specified above. The deadlines set by any Clearing System may be earlier than the relevant deadlines above.

Neither the Consent Solicitation nor the Securities have been registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") or any other securities laws. The Consent Solicitation is only directed at, and copies of the Consent Solicitation Memorandum are solely made available to, holders of the Securities who can represent that they are either (i) "qualified institutional buyers" as defined in Rule 144A under the Securities Act or institutional "accredited investors" as defined in Rule 501(a)(1), (2) (3) or (7) of Regulation D under the Securities Act or (ii) if outside the United States, non-U.S. persons (as defined in Regulation S under the Securities Act) and are lawfully able to participate in the Consent Solicitation in compliance with applicable laws of applicable jurisdictions (each such person, an "Eligible Holder").

None of the Fiscal Agent, the Principal Paying Agent, the Transfer Agent, the Registrar, the Aggregation Agent or the Information and Tabulation Agent or any of their respective directors, employees, affiliates, agents or representatives makes any recommendation as to whether Holders should deliver Consents to the Proposal pursuant to the Consent Solicitation, and no one has been authorised by any of them to make such a recommendation.  Each Holder must make its own decision as to whether to give a Consent.

Contact Details

Requests for assistance in completing and delivering Consents should be directed to the Information and Tabulation Agent at its email address and telephone numbers below. Copies of the Consent Solicitation Memorandum and other related documents may be obtained through the Consent Website. Only Eligible Holders are authorised to receive or review the Consent Solicitation Memorandum.

The Information and Tabulation Agent for the Consent Solicitation

And

Aggregation Agent for the Consent Solicitation

*********

Ukrenergo

Ukraine, 01032 Kyiv, 25 Symona Petliury Street

Financial Advisors to Ukrenergo

Rothschild & Cie
23 bis avenue de Messine

75008 Paris

France

[email protected]

Finpoint LLC
Leonardo Business Centre
19-21 B. Khmelnytskogo Street
Kyiv, 01030
Ukraine

DISCLAIMER: This announcement must be read in conjunction with the Consent Solicitation Memorandum. This announcement and the Consent Solicitation Memorandum contain important information which should be read carefully before any decision is made with respect to the Consent Solicitation. If any Holder is in any doubt as to the action it should take or is unsure of the impact of the implementation of the Proposal, it is recommended to seek its own financial and legal advice, including in respect of any tax consequences, immediately from its broker, bank manager, solicitor, accountant or other independent financial, tax or legal adviser. Any individual or company whose Securities are held on its behalf by a broker, dealer, bank, custodian, trust company or other nominee or intermediary must contact such entity if it wishes to participate in the Consent Solicitation or otherwise participate in the Proposal. None of the Fiscal Agent, the Principal Paying Agent, the Transfer Agent, the Registrar, the Aggregation Agent or the Information and Tabulation Agent or any of their respective affiliates, directors, officers, employees or agents takes any responsibility for the contents of this announcement or has made any recommendation or expressed any opinion as to whether to deliver a Consent to the Proposal pursuant to the Consent Solicitation.

This announcement is not a solicitation of consent with respect to any securities and does not constitute an invitation to participate in the Consent Solicitation in or from any jurisdiction in or from which, or to or from any person to or from whom, it is unlawful to make such invitation under applicable securities laws. The Consent Solicitation is being made solely pursuant to the Consent Solicitation Memorandum, which sets forth a detailed statement of the terms of the Consent Solicitation.

Nothing in this announcement or the Consent Solicitation Memorandum constitutes or contemplates an offer of, an offer to purchase or the solicitation of an offer to purchase or sell any security in the United States or any other jurisdiction. The distribution of this announcement and the Consent Solicitation Memorandum in certain jurisdictions may be restricted by law, and persons into whose possession this announcement or the Consent Solicitation Memorandum comes are requested to inform themselves about, and to observe, any such restrictions. Each Holder participating in the Consent Solicitation will be required to make certain representations, as set out in the Consent Solicitation Memorandum.

Within the United Kingdom, this announcement is directed only at persons having professional experience in matters relating to investments who fall within the definition of "investment professionals" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended ("relevant persons"). The investment or investment activity to which this announcement relates is only available to and will only be engaged in with relevant persons and persons who receive this announcement who are not relevant persons should not rely or act upon it.