Chad seeks $1 B debt restructuring with Glencore

Chad seeks $1 B debt restructuring with Glencore

LONDON Reuters - A consortium of banks and Glencore have started talks with Chad about the restructuring of the country's more than $1 billion foreign debt, according to a letter from the company to the IMF IMF which was seen on Saturday by the IMF in a meeting.

Chad had officially requested a debt restructuring in January, the first country to do so under a Common Framework agreed by China and other Group of 20 members with the help of the Paris Club of major creditor countries last year.

Chad's state creditors and the IMF negotiated a restructuring but insist Chad must reach comparable terms with other bilateral and private creditors.

Chad said in the letter that it was conducting a good faith and constructive relationship with Glencore and its respective advisors in this respect, in conjunction with the group of lenders which includes 16 institutions.

The lender group held formal meetings with Rothschild Cie, Chad's financial advisors and subsequently with the initial creditor committee for Chad in the past week to exchange views on Chad’s request, the Oct. 15 letter said.

The letter also said that the Swiss-based boutique advisory firm Newstate Partners had been appointed as financial advisors to Glencore, a Swiss-based miner and trader, and the consortium.

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 benefit from further financial support.

Chad was thrown into political turmoil in April, following the battlefield death of former president Idriss Deby, while the coronavirus pandemic, attacks by rebels in the north and delays in financial support, worsened its economic outlook.

Chad has said Glencore represents more than 98% of its international debt, most of it oil-for-money deals contracted in 2013 and 2014 when the country could not tap the bilateral debt market or commercial partners.

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

Chad said in the letter that concessions granted to Glencore by the group of lenders will have to be taken into account regarding the previous restructuring request.

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

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