Gazprom’s Gaz Capital requests changes to $750 million notes contract

(Reuters) – Gaz Capital, the Luxembourg-based finance arm of Russia’s Gazprom, on Thursday requested holders of one if its dollar-denominated debt notes to allow for a change in the issue’s trustee and an extension of the grace period.

Holders of Gaz Capital’s $750,000,000 loan participation notes due 2027 were also asked to allow Gaz Capital or the new trustee to name a co-trustee in case its new trustee gets caught in sanctions.

The United States, Britain, the EU and others have placed financial sanctions on Russia and many Russian companies in retaliation for Moscow’s invasion of Ukraine in late February. The sanctions have all but removed Russia from the global financial network and have forced holders of its bonds and stock in many companies to mark their holdings to zero.

Gaz Capital said the trustee of the notes resigned on May 9 citing EU sanctions. According to the base prospectus for loan participation notes issued by Gaz Capital, dated March 2017, Deutsche Bank was the original trustee.

Gaz Capital requested the grace period – or the amount of time a payment can be delayed without incurring into a penalty – be extended to 30 business days “in order to make provision for longer cash transfer periods caused by operational and technical disruptions outside the Company’s control.”

It was not clear what the original grace period was but the 2017 debt terms say a default would occur if Gazprom fails to pay amounts relevant to its debt obligations within three business days.

The next coupon payment is scheduled for Sept. 23.

Holders who vote will be eligible to receive $3.5 for every $1,000 in principal amount held, if the proposal passes.

The voting deadline is 4:00 p.m. London time (1500 UTC) on Aug. 31 and may be extended, the document shows.

(Reporting by Rodrigo Campos; additional repoting by Davide Barbuscia; Editing by David Gregorio)