By Joshua Worlasi AMLANU & Ebenezer Chike Adjei NJOKU
The energy sector special purpose vehicle, E.S.L.A. Plc has successfully completed a 90 percent buyback of a GH¢1.04billion bond offer – aimed at restructuring the country’s energy sector debt.
The buyback reduces outstanding liabilities from the company’s Tranche E2, E3, E4 and E5 bonds, scheduled to mature between 2027 and 2033.
The buyback targets non-sovereign bondholders and provides an opportunity to sell bonds at par value. The offer opened on September 16, 2024 and was available until September 30, 2024; however this was extended with a new offer close date of October 14, 2024. The settlement is scheduled for October 30, 2024.
Bonds included in this arrangement are Tranche E2 (maturing October 2027), Tranche E3 (June 2029), Tranche E4 (December 2031) and Tranche E5 (September 2033).
In a statement issued last Friday, the company said: “We hereby encourage the remaining non-sovereign bondholders to tender their bonds promptly, as E.S.L.A. PLC will immediately after closure of the buyback offer exercise every option available to settle all remaining non-sovereign bondholders”.
The buyback is funded from a lockbox account, with the bonds backed by levies collected under the Energy Sector Levy Act. These bonds were originally issued to refinance the country’s energy sector debt and have been key instruments in the sector’s financial restructuring.
Financial health of E.S.L.A. Plc
This buyback offer follows a positive financial performance by E.S.L.A. PLC. According to its unaudited financial statements for the period ending June 2024, the company reported total assets of GH¢5.21billion – including GH¢3.28billion in cash and cash equivalents. Liabilities have also been steadily reduced, from GH¢4.91billion in June 2023 to GH¢4.77billion in June 2024. The buyback is expected to further reduce its outstanding bonds, which currently stand at GH¢4.57billion.
E.S.L.A. Plc also reported after-tax profits of GH¢95million for first-half 2024, showing a significant improvement over the same period for 2023.
Market analyst note that government’s primary objective with the E.S.L.A. bond buyback is to reduce losses associated with high borrowing costs, particularly coupon payments on long-term bonds.
According to the Central Securities Depository (CSD), the total outstanding E.S.L.A. bonds amount to approximately GH¢5.5billion with an average annual coupon of 20 percent. Over the maturity horizon of these bonds, government could potentially save over GH¢5.1billion in future coupon payments.
