[2019-06-03] Mozambique stops using natural gas revenues to pay down Eurobonds

Source: Macauhub

Mozambique’s revenues from natural gas exploration will no longer be used to pay the Eurobond loan contracted by Empresa Moçambicana de Atum under a new restructuring agreement, according to the Ministry of Economy and Finance.

The ministry said in a statement that it had reached an agreement of principles on the “main business terms of a planned restructuring operation of the Mozambique Bills of US$726.524 million at a rate of 10.5% maturing in 2023,” with members of the Global Group of Mozambique Bondholders (GGMB).

GGMB brings together funds managed or advised by Farallon Capital Europe LLP, Greylock Capital Management, Mangart Capital Advisors SA and Pharo Management LLC which jointly own or control approximately 60% of the outstanding bonds.

The ministry also said that the agreement of principles now announced replaces in full the one announced in November 2018, the main change being that the new one will not include value recovery instruments related to tax recoveries of Area 1 and Area 4 gas projects in Mozambique.

The new bond issue, which will replace the previous one, is worth US$900 million, maturing on 15 September 2031, a coupon rate of 5.0%, with semiannual repayment of interest and redemption in eight half-yearly installments of US$112.5 million from 2028 to 2031.

On the date of completion of the restructuring, Mozambique will make a cash payment to the eligible bondholders up to a total of US$40.0 million, consisting of a Consent and a Pay-for-Exchange Fee.