Ecuador receives consents to amend social notes, zero-coupon notes

By Sarah Lizee

Olympia, Wash., Aug. 7 – Ecuador Social Bond Sarl said it received the requisite consents under the solicitations regarding its $230,961,000 2.6% class A social notes due 2035 (ISINs: XS2106052827, XS2106052405) and $326,852,000 zero-coupon class B notes due 2035 (ISINs: XS2106053635, XS2106053551).

The consent solicitations expired at 11 a.m. ET on Aug. 6. As previously reported, they had been extended from 11 a.m. ET on Aug. 3 originally.

By the expiration time, holders of 100% of the class A notes delivered consents and holders of 89.66% of the class B notes delivered consents.

The social notes were issued on Jan. 30 and are currently outstanding, with an $11,497,507 principal amortization payment on the class B notes scheduled on July 30. The remaining principal balance for the notes will be $315,354,493 after the payment.

The purpose of the consent solicitation was to seek modifications the issuer has been requested to approve relating to its interest as sole holder of the Republic of Ecuador's $400 million 7¼% Ecuador social bonds due 2035, issued on Jan. 30.

On April 17, holders of some securities of Ecuador gave their consent to amendments to defer interest payments of eligible bonds due between March 27 and July 15 until Aug. 15, (or Aug. 10, if a new successor IMF supported program was not publicly announced by the IMF and Ecuador by that date), and exclude from the events of default set forth in the Republic's eligible bonds cross defaults arising from defaults under certain unmodified eligible bonds.

In this regard, the republic delivered a consent solicitation request letter to the company on July 20 proposing a supplemental indenture to effect the social bond modifications. Also on July 20, the republic announced that it was seeking to modify the terms of $17.4 billion of bonds and commenced an invitation to exchange eligible bonds for new securities. According to the republic, the overall purpose of the invitation was to improve long-terms sustainability of the Ecuador’s debt burden.

The Ecuador Social Bond modifications exclude from the events of default set forth in the Ecuador Social Bonds cross defaults arising from defaults under, and defaults arising from the entering or issuance of judgments and arbitral awards relating to each series of the republic's 10¾% notes due 2022, 8¾% notes due 2023, 7.95% notes due 2024, 7 7/8% notes due 2025, 9.65% notes due 2026, 9 5/8% notes due 2027, 8 7/8% notes due 2027, 7 7/8% notes due 2028, 10¾% notes due 2029 and 9½% notes due 2030.

The changes will not alter the republic's obligation to pay the principal of or interest on the Ecuador Social Bonds when due.

As of the expiration, the class B notes principal ratio will be 0.53602851 (which is equal to $169,039,000 divided by $315,354,493).

No fee is being paid to holders in connection with this consent solicitation.

Consents were be irrevocable, except under limited circumstances.

Citigroup Global Markets Inc. (800 558-3745; 212 723-6106) acted as consent solicitation agent. The information and tabulation agent for the consent solicitation was Global Bondholder Services Corp. (212 430-3774; 866 470-3800).

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