E.S.L.A. completes 90% buyback of US$65.21M bond, reducing energy sector debt

GHANA – E.S.L.A. Plc, the special purpose vehicle managing Ghana’s energy sector debt, has successfully executed a 90% buyback of its GH¢1.04 billion (US$65.21m) bond offer.

This buyback is part of the government’s effort to restructure the country’s energy sector debt by reducing liabilities from Tranches E2, E3, E4, and E5 bonds, maturing between 2027 and 2033.

The initiative primarily targets non-sovereign bondholders, allowing them to sell their bonds at par value.

The offer was initially open from September 16 to September 30, 2024, but the closing date was later extended to October 14, 2024, with settlement scheduled for October 30, 2024.

The bonds covered under this buyback include Tranche E2 (maturing in October 2027), Tranche E3 (June 2029), Tranche E4 (December 2031), and Tranche E5 (September 2033).

E.S.L.A. Plc issued a statement encouraging the remaining bondholders to tender their bonds promptly, stating, “We encourage the remaining non-sovereign bondholders to tender their bonds promptly, as E.S.L.A. Plc will exercise all options to settle any outstanding liabilities after the offer closes.”

The buyback is financed from a lockbox account funded by levies collected under the Energy Sector Levy Act.

These bonds were originally issued to refinance Ghana’s energy sector debt and have played a critical role in its financial restructuring.

Financial health of E.S.L.A. Plc

This buyback follows a positive financial performance by E.S.L.A. Plc. According to its unaudited financial statements for June 2024, the company reported total assets of GH¢5.21 billion, including GH¢3.28 billion (US$205.65m) in cash and equivalents.

Liabilities have steadily decreased from GH¢4.91 billion (US$307.85m) in June 2023 to GH¢4.77 billion (US$299.07m) in June 2024.

The buyback is expected to reduce further outstanding bonds, which currently stand at GH¢4.57 billion (US$286.53m).

The company also reported an after-tax profit of GH¢95 million (US$5.96m) for the first half of 2024, which is substantially better than the previous year.

Market analysts note that the government’s main goal with the E.S.L.A. bond buyback is to reduce losses associated with high borrowing costs, particularly coupon payments on long-term bonds.

Currently, E.S.L.A. bonds total approximately GH¢5.5 billion (US$344.84m), with an average annual coupon rate of 20%. Over time, the government could save an estimated GH¢5.1 billion (US$319.76m) in future coupon payments.

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