Glencore opens discussions with Chad on debt restructuring

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The logo of commodity trader Glencore is pictured outside the company’s headquarters in Baar, Switzerland on July 18, 2017. REUTERS / Arnd Wiegmann / File Photo

LONDON, Oct. 16 (Reuters) – Glencore (GLEN.L) and a consortium of banks have started talks with Chad over restructuring the country’s over $ 1 billion commercial debt, according to a letter from the company at the International Monetary Fund view Saturday.

Chad officially asked for debt restructuring in January, the first country to do so within a common framework agreed last year by China and other members of the Group of 20 with the help of the Paris Club of principals. creditor countries. Read more

Chad’s public creditors and the IMF have agreed to a restructuring but insist that Chad must achieve conditions comparable with other bilateral and private creditors.

Glencore said in the letter that with the group of lenders which includes 16 institutions, it is engaging with Chad and their respective advisers “constructively and in good faith” following a request from the country for talks.

“The group of lenders held initial meetings with Rothschild & Cie, Chad’s financial advisers, and then with Chad’s official creditors committee last week to exchange views on Chad’s request,” the October 15 letter reads. .

The letter also stated that boutique consultancy firm Newstate Partners had been appointed financial advisor to Glencore, a Switzerland-based miner and trader, and the consortium.

“We welcome the good faith gesture of our partner Glencore to open discussions for the restructuring of our debt and to find a compromise which would be acceptable to both parties,” the Chadian Minister of Budget and Finance told Reuters. , Tahir Hamid Nguilin, adding that Chad’s economic recovery depended on talks.

The restructuring of Chad’s total debt of around $ 3 billion, which the IMF has described as unsustainable, is a prerequisite for the Central African country to receive additional financial support.

Chad was plunged into political turmoil in April following the battlefield death of former President Idriss Deby, while the coronavirus pandemic, rebel attacks in the north and delays in financial support have worsened its economic outlook.

Chad said Glencore accounts for more than 98% of its commercial debt, most of the oil-for-cash deals made in 2013 and 2014, when the country was unable to access the international debt market or bilateral partners.

The debt has already been restructured twice, in 2015 and 2018.

Glencore said in the letter that the concessions the lender group has given to Chad in previous restructurings will have to be taken into account regarding the current restructuring request.

In 2018, the new conditions included an extension of the maturity to 2030 from 2022, a two-year grace period on principal repayments and a lower interest rate of Libor plus 2%, down from 7.5%. .

A source with direct knowledge of the matter said the latest restructuring made debt repayable with oil prices of around $ 45 a barrel. Brent futures were trading at around $ 85 a barrel last week.

Reporting by Julia Payne Additional reporting by Karin Strohecker and Mahamat Ramadane in N’Djamena Writing by Bate Felix Editing by David Holmes and Christina Fincher

Our Standards: Thomson Reuters Trust Principles.


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