Seychelles says informal group of 9 1/8% noteholders supports offer

By Jennifer Chiou

New York, Dec. 24 - The Republic of Seychelles announced that an informal group of creditors holding its 9 1/8% notes due 2011 intends to support the country's debt restructuring by participating in the exchange offer for the 9 1/8% notes as well as the amortizing notes due 2011.

Members of the informal group include Banco Finantia, Cable & Wireless and Diageo.

As already reported, in exchange for those notes, the country is offering new 2% notes due 2041 and new discount notes due 2026.

The republic announced the beginning of the offer on Dec. 7.

The offer will end Jan. 14. Settlement is expected to occur Feb. 11, although interest on the new notes will accrue from Jan. 1.

Also eligible for the exchange offer are some loans with Seychelles as obligor. The total amount of debt eligible for exchange is $320 million.

Holders are being invited to tender their notes or loans at the applicable ratio in exchange for either the new 2% notes or the new discount notes.

The new 2% notes will amortize in seven equal semiannual installments, with the first one due in July 2038 and the final one in July 2041.

The new discount notes will be issued at a 50% discount to the principal amount of notes or loans tendered. They will amortize in 20 equal semiannual installments beginning in July 2016 and ending in January 2026.

The interest rate on the discount notes will be 3% for the first two years, 5% for the next three years, 7% for years six, seven and eight and 8% from year nine through maturity.

The new discount notes will benefit from a partial guarantee on interest from the African Development Bank of up to $10 million.

Under the terms of both series of new notes, a one-off goodwill payment will be made in April 2010 in lieu of a portion of past due interest.

"The IMF concluded earlier this year that our debt cannot be repaid on existing terms, and the terms of our exchange offer have been designed to place our debt burden firmly on a sustainable footing in conjunction with the debt relief being provided by other creditors," the president of Seychelles, James Michel, said in a previous news release.

Ahmed Afif, principal secretary at the Ministry of Finance, previously added, "A number of our creditors told us that it was important to include both a par and a discount alternative in our exchange offer, which is why we are allowing creditors to choose the method of delivering debt relief.

"In recent weeks we have also been working hard to improve the terms of the new notes and the size of the goodwill payment to the limit of what is prudent under the medium-term macroeconomic framework that we have agreed with the IMF.

"We have also sought innovative ways of adding value for creditors in a way that does not place excessive pressure on future cash flows. This is the origin of the partial guarantee from the [African Development Bank]."

D.F. King & Co., Inc. (+44 20 7920-9700) is the information agent. Holders may also contact White Oak Advisory LLP (+44 20 7969-2731), which is acting as the financial adviser to the government for the exchange offer.

© 2015 Prospect News.
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