ESLA Plc to restructure maturity profile of outstanding bonds in Ghs 1.2 billion debt swap
ESLA Plc is seeking to restructure the maturity profile of the outstanding bonds by converting part of bonds due to mature in 2024 to a maturity date in 2029.
The restructuring of the maturity date of the outstanding bonds follows the announcement of an exchange offer for swapping GH¢1.2 billion of Tranche E1 bonds due in October 2024 for Tranche E3 bonds due June 2029.
ESLA, per the announcment is targetting a minimum of GH¢100 million and up to GH¢1.2 billion of Tranche E1 bonds to be switched into Tranche E3 Bonds under the GH¢10 billion bond programme.
Courage Martey, an economist with Databank speaking on the debt swap in an interview had this to say, “Strictly speaking, they’re not buying back 2024 maturity with cash (as government would typically do). They are offering investors an existing bond with a longer tenor on the market and taking the equivalent amount of the 2024 bond from investors. So, they’re exchanging one bond for the other. That’s why it’s called an exchange offer.”
The Finance Ministry has noted that as of the end of 2020, energy sector debt in excess of GH¢8 billion had been refinanced through the ESLA over the last four years, in the form of debt swaps and cash payments to creditors.
Following the issuance of the ESLA bonds, state-owned enterprise (SOE) debts were novated to E.S.L.A. PLC at the end of 2020. Of the total amount of approximately GH¢8.06 billion, GH¢1.87 billion was settled in cash to creditors while the remaining GH¢6.19 billion was covered by debt swaps.
Under the novation agreement, the Issuer (ESLA Plc) became responsible for the repayment of the relevant portion of energy sector debt to the relevant creditors. However, where a creditor opts for the energy debt cash payment, ESLA pays directly through the bond proceeds utilisation account bank with the net proceeds of the relevant tranche.
But in cases where the creditor opts for the energy debt swap, it enters into a bond purchase agreement with the issuer and is issued with the relevant number and amount of bonds.
In 2018, a total of GH¢5.45 billion was novated to creditors, comprising of about GH¢3.92 billion in debt-swaps and GH¢1.53 billion in cash settlement; while in 2019 GH¢988.78 million was settled, with GH¢648.93 million in debt-swaps and GH¢339.85 million in cash settlements. Last year, ESLA novated about GH¢1.62billion entirely in debt-swaps.
