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Wednesday, October 27, 2021

ESLA targets GH¢2.2 billion in new 12-year bond issuance

The offer was opened to investors on Friday, September 17, 2021,

ESLA Plc on Wednesday, September 22, 2021, closed the fresh issuance of GH¢2.2 billion in a 12-year fixed-rate [19.75% to 20% per annum] bond, due on September 9, 2033.

In a notice to prospective investors, the issuer indicated that the Tranche E5 issuance has a minimum target of GH¢500 million and up to GH¢2.2 billion in senior bonds [a debt instrument that ranks highest in the order of repayment] backed by an assignment of the ESLA Receivables by the government, acting through the Ministry of Finance, to the ESLA Plc.

The offer was opened to investors on Friday, September 17, 2021, and settlement will be reached on Friday, September 24, 2021; with bonds credited to Central Securities Depository (CSD) accounts of successful paid-up investors.

As part of the reforms in the energy sector, E.S.L.A Plc was established as a Special Purpose Vehicle (SPV) to issue long-term bonds backed by ESLA receivables to resolve energy sector debts of almost GH¢10.0 billion owed to banks and trade creditors.

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ESLA Receivables Projection

The 2020 annual report on the management of the energy sector levies and accounts projects that ESLA proceeds in the next four years to averagely increase at 12 percent per annum, from 2021 to 2024.

The 2021 levy is estimated to increase by GH¢634.77 million at 12.0 percent, compared with 2020. The indicative projections for the other years-2022, 2023, and 2024-show an average growth of 12.0 percent compared with the respective previous year’s forecast.

Growth in levies is largely envisaged to contribute to the reduction in the financing challenges facing the energy sector, as well as support the Road Fund and Energy Commission in delivering on their mandate.

Interest Payment

Since the inception of ESLA Plc to the end of January 2021, a total of GHS 3.881 billion has been paid as interest payment for the benefit of bondholders of tranches of E1 to E4 bonds. The company in 2020 made the required coupon payments of GH¢1.30 billion to its bondholders. Funds in excess of its immediate obligations were transferred to the lockbox in accordance with the requirements of the bond programme and invested in permissible investments.

Currently, ESLA Plc has an outstanding issuance of about GH¢7.63 billion, representing a total issuance of GH¢ 8.294 billion, out of which approximately GH¢664 million was redeemed in a buyback transaction finance with funds from the company’s lockbox account.

Energy sector debt

Currently, energy sector debt in excess of GH¢8.06 billion has been refinanced through the ESLA, over the last four years, in the form of debt swaps and cash payments to creditors. State-owned enterprise (SOE) debts were also novated to E.S.L.A. Plc as of the end of 2020.

Of the total amount of approximately GH¢8.06 billion, GH¢1.87 billion was settled in cash to creditors, while the remaining GH¢6.19 billion was covered by debt swaps.

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