• The agreement with the Steering Committee brings Zambia closer to the completion of its debt restructuring.
• The agreement to restructure the Euro bonds provides essential debt relief, including permanently waiving around $700 million in claims.
• This will release significant resources for the country’s developmental agenda.
Zambia has reached an agreement in principle with the Steering Committee on the key commercial terms of a proposed restructuring transaction relating to the Government’s bonds due 2022, 2024 and 2027.
Pursuant to the agreement-in-principle, Bondholders will be invited to exchange or vote in favor of a consent to amend the terms of their Bonds for new fixed income instruments representing unsecured obligations of the Government. The New Bonds will be issued on the commercial terms.
Reacting to the development, Finance Minister Dr. Situmbeko Musokotwane said the agreement with the Steering Committee brings Zambia closer to the completion of its debt restructuring, which will release significant resources for the country’s developmental agenda.
Dr. Musokotwane stated that the agreement to restructure the Euro bonds provides essential debt relief, including permanently waiving around $700 million in claims and offering approximately US$2.5 billion in cash flow relief through reduced debt servicing payments during the IMF Programme period.
“Zambia believes this agreement adheres to the comparable treatment principle and extends the foundation laid by the Memorandum of Understanding agreed with our official creditors. It paves the way for similar restructuring agreements with our other private creditors,” Dr. Musokotwane stated.
He added that government hopes for the swift implementation of the agreement in principle by the end of the year.
“We also extend our gratitude to all our creditors for the support and cooperation that has brought us to this point. Now, it is Zambia’s responsibility to leverage this breakthrough for accelerated progress in our reform agenda and the pursuit of long-term sustainable economic growth.”
“Our Government takes pride in the progress achieved and remains committed to further reinvigorating our economy, fostering job creation, and creating opportunities for the Zambian people,” he added.
He further said the Government and Restricted Investors intend to put their best efforts to finalize the execution of this agreement in principle by the end of the year, with the implication that the exchange offer needs to be launched no later than the third week of November.
“The Restructuring will be implemented through an exchange offer and/or consent solicitation. Implementation of the Restructuring remains subject to agreement between the Government and the Steering Committee on the definitive legal documentation for the New Bonds and exchange offer and/or consent solicitation.”
The members of the Steering Committee currently own or control approximately 18% of the outstanding Bonds, while all the members of the Committee currently own or control more than 40% of the outstanding Bonds.
