Ukraine's state-run railway declares technical default

Ukraine's state-run railway company Ukrzaliznytsia on Tuesday declared technical default on its debt obligations.

"Today we have informed our creditors of technical default on a number of Ukrzaliznytsia's obligations," Maxim Blank, acting head of the company, told reporters during a media briefing in Kiev.

He said Ukrzaliznytsia was forced to declare the technical default over an "extremely difficult" situation in the country, lack of control over the railway which lies on the territory of the restive Donetsk and Lugansk regions, drop in transport volumes and corruption.

To avoid bankruptcy, Ukrzaliznytsia would seek restructuring of 85 percent of its internal and external debts worth 37.5 billion hryvnyas (around 1.8 billion U.S. dollars) in the aggregate, Blank said.

The railway company has already started debt-restructuring talks with its domestic lenders, Blank said, adding that the negotiations on the reorganization of the Eurobond obligation of 500 million dollars will begin in the near future.

Ukrzaliznytsia currently controls the railroad network in Ukraine with a combined total track length of over 23,000 kilometers. It carries around 50 percent of the country's overall passenger traffic and 82 percent of its freight. Endite