By Susanna Moon
Chicago, April 18 – The Republic of Mozambique issued $726,524,000 of 10½% notes due 2023 at par in exchange for notes issued by state-owned fishing company Empresa Moçambicana de Atum SA, or Ematum.
The issuer was offering to issue the new notes in exchange for $697 million loan participation notes due September 2020 issued by Mozambique Ematum Finance 2020 BV, according to a government prospectus.
The notes were issued on a limited recourse basis for financing the purchase of the rights and obligations of the notes issuer for an $850 million loan to Ematum.
In addition to the exchange, the issuer said it secured noteholder approval to amend the notes, including to the maturity date so that the issuer redeemed the notes on April 6.
The notes were issued under Regulation S and Rule 144A in denominations of $200,000 or in integrals of $1,000 after that.
The joint dealer managers were Credit Suisse Securities (Europe) Ltd. and VTB Capital plc.
Citibank, NA, London Branch is the fiscal agent.
“Ematum has experienced net losses in recent periods and therefore the existing notes issuer may not be able to service the existing notes in current or future periods,” the prospectus said.
The prospectus also noted that it has been “widely reported in the press that the proceeds of the issue of the existing notes had been used in part to purchase defense equipment, rather than exclusively to purchase tuna fishing vessels and infrastructure operated by Ematum.”
So far, the fishing company “has taken delivery of 24 tuna boats and will shortly take delivery of three trimarans to support its fleet” and subsequent stories have also questioned whether all of the note proceeds were used for authorized or appropriate purposes, the release added.
On Monday, Moody’s Investors Service said it downgraded Mozambique’s issuer rating to Caa1 from B3 with an outlook of stable after news of the exchange, which is considered a distressed exchange and a default on government-guaranteed debt.
The review for downgrade began in December.
New notes
| Issuer: | Mozambique
|
| Issue: | Notes
|
| Amount: | $726,524,000
|
| Maturity: | Jan. 18, 2023
|
| Coupon: | 10½%
|
| Dealer managers: | Credit Suisse Securities (Europe) Ltd. and VTB Capital plc
|
| Issue date: | April 6
|
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