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Glencore opens talks with Chad on debt restructuring



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Commodity trader logo Glencore appears in the photo of the company’s headquarters in Baar, Switzerland, July 18, 2017. REUTERS / Arnd Wiegmann / File Photo

LONDON, Oct 16 (Reuters) – Glencore (GLEN.L) and a consortium of banks have begun talks with Chad on more than $ 1 billion in trade debt restructuring from the country, according to a letter from the company to the International Monetary Fund which appeared on Saturday.

Chad had in January officially called for debt restructuring, the first country to do so under a common framework agreed last year by China and another group of 20 members with the help of the Paris Club of major creditor countries. Read more

Chad’s state creditors and the IMF have agreed on a restructuring but insist that Chad should meet terms comparable to other bilateral and private creditors.

Glencore said in the letter that, along with the group of lenders comprising 16 institutions, it was engaging with Chad and their respective advisers in a “constructive and bona fide” manner following a request for talks by the country.

“The group of lenders had initial meetings with Rothschild & Cie, Chad’s financial advisers, and subsequently with Chad’s official creditors’ committee last week to exchange views on the Chad’s request. Chad, “the letter said on October 15.

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

“We welcome the good faith gesture of our partner Glencore to open discussions for our debt restructuring, and find a compromise that would be acceptable to both parties,” said the Minister of Budget and Finance of Chad’s Tahir Hamid Nguilin told Reuters, adding that Chad’s economic recovery depended on talks.

The restructuring of Chad’s total debt of about $ 3 billion, which the IMF described as unsustainable, is a prerequisite for the Central African country to benefit from further financial support.

Chad was plunged into political turmoil in April following the death of former President Idriss Deby’s battlefield, while the coronavirus pandemic, attacks by rebels in the north, and d delays in financial support, have worsened its economic prospects.

Chad said Glencore accounts for more than 98% of its trade debt, most of it dealing with oil with cash contracted in 2013 and 2014 when the country was unable to exploit the international oil market. debt or bilateral partners.

Debt has already been restructured twice, in 2015 and 2018.

Glencore said in the letter that the concessions that the group of lenders granted to Chad in previous restructurings will have to be considered in relation to the current restructuring request.

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

A source with direct knowledge of the issue said the latest restructuring has made debt that could serve at oil prices to about $ 45 per barrel. Brent oil futures were trading at about $ 85 a barrel last week.

Reporting by Julia Payne Additional reporting by Karin Strohecker, and Mahamat Ramadane in N’Djamena Writing by Bate Felix Editing by David Holmes and Christina Fincher

Our Standards: The Principles of Trust of Thomson Reuters.

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