Glencore opens talks with Chad over debt restructuring

By Julia Payne

LONDON, Oct 16 (Reuters) - Glencore and a
consortium of banks have started talks with Chad over the
restructuring of the country's more than $1 billion commercial
debt, according to a letter from the company to the
International Monetary Fund (IMF) seen on Saturday.

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

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

Glencore said in the letter that together with the group of
lenders which includes 16 institutions, it was engaging with
Chad and their respective advisors in a "constructive and good
faith manner" following a request for talks from the country.

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

The letter also said 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, have worsened its economic outlook.

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

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

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

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

A source with direct knowledge of the matter said the last
restructuring made the debt serviceable with oil prices at
around $45 per barrel. Brent oil futures were trading at around
$85 a barrel last week.
(Reporting by Julia Payne
Additional reporting by Karin Strohecker
Writing by Bate Felix
Editing by David Holmes)

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