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RusHydro

September 23, 2022

RusHydro publishes the Notice to the holders of RUB 20,000,000,000 8.125% Loan Participation Notes due 2022

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO, OR TO ANY PERSON LOCATED OR RESIDENT IN, ANY JURISDICTION WHERE IT IS UNLAWFUL TO RELEASE, PUBLISH OR DISTRIBUTE THIS ANNOUNCEMENT OR RELATED DOCUMENTS.

THIS NOTICE IS IMPORTANT AND REQUIRES THE IMMEDIATE ATTENTION OF HOLDERS. IF HOLDERS ARE IN ANY DOUBT AS TO THE ACTION THEY SHOULD TAKE, THEY SHOULD SEEK INDEPENDENT ADVICE, INCLUDING AS TO ANY LEGAL, FINANCIAL OR TAX CONSEQUENCES, IMMEDIATELY FROM THEIR OWN BROKER, BANK MANAGER, SOLICITOR, ACCOUNTANT OR OTHER INDEPENDENT FINANCIAL, TAX OR LEGAL ADVISER.

23 September 2022

PJSC "RUSHYDRO"



(“RusHydro”)



NOTICE

to the holders of



RUB 20,000,000,000 8.125 per cent. Loan Participation Notes due 2022 issued by, but without recourse to, RusHydro Capital Markets DAC (the “Issuer”) for the sole purpose of financing the loan under the Loan Agreement (ISIN: XS1691350455, CFI: DYFXXR)



(the “Notes”)



NOTICE IS HEREBY GIVEN that RusHydro is proposing to make direct payments to the holders of the Notes as set out below. This proposal is aimed at those Noteholders who hold their Notes in non-Russian depositaries and clearing systems (the “Non-Russian Noteholders”). Payments to Noteholders who hold their Notes via Russian depository accounts (the “Russian Noteholders”) shall be made separately through Russian depositaries in accordance with applicable mandatory Russian legislation.

To make direct payments to the Non-Russian Noteholders, RusHydro is required to obtain a Government Commission Approval (as defined below) and use a type D account opened in Russian rubles with a Russian bank. To apply for the Government Commission Approval and open a type D account, RusHydro would first need to identify such Non-Russian Noteholders who are willing to receive payments under the Notes via a type D account (the “Electing Noteholders”). Accordingly, RusHydro hereby asks the Electing Noteholders to identify themselves and provide certain information about themselves and the Notes held by them.

For Non-Russian Noteholders who fail to make an election to receive payments under the Notes via a type D account as set out herein (the “Non-Electing Noteholders”), RusHydro will be required to transfer the amounts due to them to a type C account pursuant to the Russian President’s Decree No. 95 of 5 march 2022. By law, monies transferred to a type C account may only be used for a limited number of purposes (such as the payment of Russian taxes, etc.) and will not be available for transfer to the Non-Electing Noteholders’ accounts of other types opened with Russian banks or outside Russia.

Terms used but not otherwise defined in this Notice have the meanings given to them in the trust deed dated 28 September 2017 (the "Trust Deed") between the Issuer and BNY Mellon Corporate Trustee Services Limited as trustee (the "Trustee").

Rationale

From February 2022 onwards the United States of America, the European Union, the United Kingdom and other nations have imposed additional sanctions against the Russian Federation and Russian persons in connection with events in Ukraine.  The sanctions, among other things, significantly disrupted the existing framework and infrastructure for servicing, delivery and settlement of securities.

On 24 March 2022, RusHydro duly fulfilled its payment obligations under the Loan Agreement by transferring funds in the amount of RUB 812,500,000 for subsequent coupon payment. However, the funds duly received by the Principal Paying Agent were subsequently frozen because of sanctions introduced by the U.K. Office of Financial Sanctions Implementation (OFSI) on 24 March 2022 and did not reach the Noteholders. Any funds that RusHydro may transfer to the Issuer under the Loan Agreement or to the Principal Paying Agent will presumably be subject to similar freezing before they reach the Noteholders at maturity of the Notes.

On 9 May 2022, BNY Mellon Corporate Trustee Services Limited notified the Issuer and RusHydro of its inability to act as the Trustee in respect of the Notes. On 9 May 2022, TMF Management (Ireland) Limited resigned as the share trustee to the Issuer. On 4 July 2022, TMF Administration Services Limited, an Irish corporate services provider to the Issuer, unilaterally terminated with immediate effect the corporate services agreement with the Issuer. As a result, neither the Issuer, nor the Notes infrastructure established by the Trust Deed are fully functional at this time and the Noteholders are unlikely to receive any payments that may be made by RusHydro via said infrastructure pursuant to the Loan Agreement and the Trust Deed.

Pursuant to the Russian President’s Decree No. 430 of 5 July 2022 and implementing decisions of the Russian Central Bank entities who have payment obligations in relation to Eurobonds (such as RusHydro in relation to the Notes) are required to make payments through Russian depositories to investors who hold such Eurobonds via Russian depository accounts. Accordingly, in compliance with this mandatory requirement RusHydro shall pay the Russian Noteholders through Russian depositaries.

RusHydro is working on a solution that would allow all the Noteholders, including the Non-Russian Noteholders, to receive their funds upon maturity of the Notes. The Russian President’s Decree No. 529 of 8 August 2022 and the Russian Central Bank’s implementing decision (together the “Type D Account Regulations”) allow persons who have payment obligations in relation to Eurobonds (such as RusHydro in relation to the Notes) to open special type D accounts in Russian rubles with Russian banks to make payments in respect of Eurobonds held at non-Russian depositories and clearing systems.

Pre-Conditions to direct payment to the Electing Noteholders

Payments under the Type D Account Regulations are subject to prior approval of the Russian Government Commission for Control over Foreign Investments in the Russian Federation (the “Government Commission”). RusHydro is proposing to apply for an approval of the Government Commission of its direct payments to the Electing Noteholders (the “Government Commission Approval”) and to open a type D account in favour of the Electing Noteholders and to use such account to make payments due to the Electing Noteholders at maturity of the Notes.

Pursuant to the Type D Account Regulations, type D accounts are open in favour of specific recipients. Accordingly, to take advantage of the payment option allowed by the Type D Account Regulations, RusHydro needs to identify the Electing Noteholders and receive from them such information as may be required by (i) the Government Commission to issue the Government Commission Approval and (ii) a Russian bank (the “Bank”) selected by RusHydro to carry out the settlements with the Electing Noteholders.

The approval by RusHydro of the relevant funds transfer to an Electing Noteholder is conditional upon receipt of the originals of the Election Documents on behalf of such Electing Noteholder as set out in section “Noteholder to make a direct payment election” below.

Risk factors

The Type D Account Regulations are new and untested legislation. They are worded in general terms and give little or no guidance on important specific questions, including, without limitation, as to (i) the timing and procedure for obtaining the Government Commission Approval and (ii) the exact scope of identifying information and documents that may be required by the Bank to carry out the payments to the Non-Russian Noteholders. In response to RusHydro’s request for clarifications, the Russian Central Bank has indicated to RusHydro that Russian banks have discretion in determining the scope of identifying information and documents they require to process payments to investors from type D accounts.

The implementation of the proposed direct settlement with the Electing Noteholders involves discretion, and requires consent and cooperation, of third parties over which RusHydro has no control, including without limitation the Government Commission and the Bank. Delays on the part of the Government Commission or its failure to issue the Government Commission Approval or delays or failure by the Bank to transfer the payments may result in the direct payment arrangement not achieving the desired result in full or in part. Although RusHydro would take reasonable steps to ensure that the proposed direct settlements are completed and the relevant amounts are transferred to the Electing Noteholders as soon as reasonably possible, no assurance can be given that this will be achievable.

Similarly, given the existing complex international sanctions regimes, no assurance can be given that the Electing Noteholders’ banks will accept payments from the Bank and make the transferred funds available to the respective Electing Noteholders.

Noteholder to make a direct payment election

To elect to receive the monies due to a Noteholder at maturity of the Notes directly from RusHydro in accordance with the Type D Account Regulations (“Direct Payment Election”), an Electing Noteholder should deliver, or arrange to have delivered on its behalf, to RusHydro scans of the following documents:

   (i)    proof of holding of the Notes (as set out below);


   (ii)   a valid completed and duly executed Direct Payment Election Notice;


   (iii)  a duly executed deed of assignment and waiver; and


   (iv)  a valid completed and duly executed Notice of Assignment and Waiver



by no later than 10:00 a.m. (London time) / 12:00 noon (Moscow time) on 3 October 2022, to the attention of the Corporate Finance Department at the following email address: , .

Acceptable proof of holding referred to under item (i) above are documents allowing to clearly identify the end-holder of specific Notes, including (i) statements of account from Direct Participants (as defined below), screenshots from Euroclear or Clearstream, Luxembourg identifying the relevant person as a Direct Participant and identifying the Notes held by them, along with evidence indicating in whose favour the Notes are held by the relevant Direct Participant and (ii) evidence that the Notes are held by a particular end-holder through an Intermediary or Intermediaries (in each case including the amount of the Notes held and the names and account numbers of the relevant end-holders and Intermediary or Intermediaries along the entire holding chain from the relevant end-Noteholder to the relevant Direct Participant). A “Direct Participant” means a person that is shown in the records of the clearing and settlement systems of Euroclear or Clearstream, Luxembourg as a holder of Notes.  An “Intermediary” means a depositary, broker, dealer, commercial bank, trust or asset management company or other nominee or custodian that holds any Notes.

Documents listed under items (ii) through (iv) above shall together be referred to as the “Election Documents”. Forms of the Election Documents are available upon request sent to the following email address: .

Originals of the Election Documents shall be delivered by hand or sent by an internationally recognized courier service to the following addresses

PJSC “RusHydro”

7 Malaya Dmitrovka Street

Moscow 127006

Russian Federation

Attention: Corporate Finance Department

or

JSC «Institute Hydroproject», Branch in the Kyrgyz Republic

Office 1105, Business Centre “Russia”

19 Razzakova Street

Bishkek 720040

Kyrgyz Republic

Attention: PJSC “RusHydro” (Corporate Finance Department)

The approval by RusHydro of the relevant funds transfer to an Electing Noteholder is conditional on receipt of the Election Documents on behalf of such Electing Noteholder at the addresses stated above.

RusHydro reserves the right to request further information and documents from the Electing Noteholders if such information and documents are required by the Government Commission or the Bank.

Only Noteholders who hold the Notes as of 27 September 2022 may submit a Direct Payment Election Notice.

As part of proposed direct redemption and settlement arrangements and subject to the Type D Account Regulations or other applicable laws, the Electing Noteholders shall be able to select receiving payments in Russian rubles, United States dollars or other foreign currency. Any and all currency conversion, exchange, transfer or other bank fees (including fees charged by any intermediary or correspondent banks) in connection with the transfer of the relevant funds to the Electing Noteholders’ accounts shall be borne by the Electing Noteholders and not RusHydro. The selection of currency other than Russian rubles or U.S. dollars may be subject to the discretion of, and special arrangements with, the Bank.

Direct Payment Election Notice irrevocable

Direct Payment Election Notices will be irrevocable.






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