Belize closes exchange offer; 98.1% of commercial external debt restructured

By Jennifer Chiou

New York, Feb. 20 - The Government of Belize announced the close of its offer to exchange most of its outstanding external commercial debt for $546.8 million of new bonds due 2029.

The government said it received tenders representing 96.8% of the aggregate principal amount of the eligible claims, and as a result, Belize said that 98.1% of its commercial external debt was restructured.

Among the tendered claims were two loans amounting to $115.2 million, which had benefited from a third-party insurance policy.

The new bonds will have principal payments starting in 2019. Interest will be at 4.25% for the first three years, stepping up to 6% in years four and five and 8.5% after that.

Creditors received accrued interest through the closing date in cash.

"The Government of Belize views this operation as an overwhelming success," prime minister and minister of Finance Said Musa said in a news release.

"Belize's debt repayment profile - visibly unsustainable just a few weeks ago - has now been returned to a sound basis."

Belize noted that this is the first time that a so-called collective action clause has been used to amend the payment terms of a sovereign bond governed by the law of a U.S. jurisdiction in more than 70 years.

Tenders by creditors were due by Jan. 26. The offer began on Dec. 18.

Belize accepted late tenders of its 9¾% notes due 2015 until Feb. 14. The government previously said that a majority of holders of its 9¾% notes approved changes to the terms of the securities to conform the maturity date and coupon structure to the financial terms of Belize's new bonds maturing in 2029.

On Dec. 21, Belize said that a Belize creditors' committee unanimously decided to participate in the government's exchange offer.

Committee members include AIC Finance Ltd., British-American Insurance Co., Caribbean Money Market Brokers Ltd., First Citizens Asset Management Ltd., First Global Financial Services Ltd., Guardian Asset Management, Jamaica Money Market Brokers Ltd., National Commercial Bank (SVG), RBTT Merchant Bank Ltd., RBTT Trust Ltd., Republic Bank Ltd., Sagicor Life Inc., and Trinidad & Tobago Unit Trust Corp.

BroadSpan Securities LLC was financial adviser to the committee, and Houlihan Lokey Howard & Zukin was financial adviser to the government.

On Dec. 6, the company said it stopped payments on the existing debt eligible for the exchange, which was preceded by four months of intensive consultations with the affected creditors by the Belizean authorities.

The National Assembly of Belize previously approved the exchange.

D.F. King & Co., Inc. was the information agent (call collect 212 269-5550 or fax 212 709-3279).

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