E.S.L.A. Plc Completes 90% Buyback of GH¢1.04 Billion Bond Offer to Restructure Energy Sector Debt

E.S.L.A. Plc, the special purpose vehicle for the energy sector, has successfully executed a 90 percent buyback of a GH¢1.04 billion bond offer aimed at restructuring the country’s energy sector debt.

This buyback will reduce the outstanding liabilities related to the company’s Tranche E2, E3, E4, and E5 bonds, which are set to mature between 2027 and 2033.

Targeting non-sovereign bondholders, the buyback offers an opportunity to sell bonds at par value. Initially opened on September 16, 2024, the offer was extended to October 14, 2024, with settlement scheduled for October 30, 2024.

Bonds included in this buyback are Tranche E2 (maturing October 2027), Tranche E3 (June 2029), Tranche E4 (December 2031), and Tranche E5 (September 2033).

In a statement released last Friday, E.S.L.A. Plc encouraged remaining non-sovereign bondholders to tender their bonds promptly, noting that the company would utilize every available option to settle outstanding amounts immediately after the buyback offer closes.

The buyback is being 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 are crucial to the sector’s financial restructuring.

Financial Health of E.S.L.A. Plc

This buyback offer comes on the heels of a strong 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¢5.21 billion, which includes GH¢3.28 billion in cash and cash equivalents. Liabilities have also been steadily reduced, from GH¢4.91 billion in June 2023 to GH¢4.77 billion in June 2024. The buyback is expected to further decrease its outstanding bonds, which currently total GH¢4.57 billion.

Additionally, E.S.L.A. Plc reported after-tax profits of GH¢95 million for the first half of 2024, marking a significant improvement compared to the same period in 2023.

Market analysts note that the government’s primary objective with the E.S.L.A. bond buyback is to mitigate losses associated with high borrowing costs, particularly the 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¢5.5 billion, with an average annual coupon of 20 percent. Over the bonds’ maturity period, the government could potentially save over GH¢5.1 billion in future coupon payments.