ESLA buys back bonds from holders

ESLA Plc, has bought back a portion of the bonds issued under the GHc 10 billion programme to refinance Ghana’s energy sector legacy debts from the holders of the bonds due to mature in 2024 and 2027.

According to an announcement made by the company, last Friday, the buy-back will be funded using proceeds held in the state owned, special purpose vehicle’s LockBox Account for settlement on Tuesday, June 25, 2019 with a minimum buy back target of GHc 200 million.

From the 2018 financial statement of the Company did a similar buy-back arrangement to the tune of GHc 203.03 million.

Currently, the company is believed to have somewhere between GHc 206.24 million and GHc 310.41 million in its lockbox account (the actual amount depending on which figures are used – those from ESLA itself or those from the Ministry of Finance). This follows a transfer of excess of the Debt Service Reserve amount into a Lockbox Account for the benefit of bond holders.

ESLA Plc, in 2017, set out to raise GH¢6 billion for the first tranche of the GH¢10 billion legacy debt. However, it was only able to raise some GHc4.7 billion.

The bonds which were issued as the first tranche under the bond programme comprised of seven-year bonds to the tune of GHc 2.4 billion at a final yield of 19 percent and 10-year bonds to the tune of GHc 2.29 billion, carrying a coupon rate of 19.5 percent.

In January 2018, ESLA Plc raised an additional GH¢615,947,860 through the 10-year bond issuance that it reopened.

Late last year, it was expected that another bond offer would be made under the 10-year bonds programme worth up to GHc340 million. This was going to be the third tap re-opening issuance following the initial issuance, done in November 2017, but which was significantly undersubscribed.

Most of the energy bonds issued so far have been bought by banks in Ghana since the receipts are used by ESLA to pay off the debts being owed them. This enables the banks to replace those non-performing loans with performing investments in bonds and thus frees them from having to make loan loss provisions.

Receipts Forecast

The 2018 Annual Report on the Management of the Energy Sector Levies and Accounts, indicates that for 2019, a total of GHc 3, 947.82 million has been targeted for collection under the Energy Sector Levy Act, (ESLA) representing an increase over 2018 collections of GHc 440.78 million, and 12.6 percent higher than the targeted amount for last year of GHc 3,507.04 million.

If this target is met it will enable faster resolution of the energy sector’s problematic legacy debts as well as increase the pace of providing direly needed power generation and transmission infrastructure as well as improved road maintenance.

Transfers

The ESLA account at the end of 2018, recorded a closing balance of GHc 615.42 million.

E.S.L.A. Plc had issued bonds with a face value of GHc 5,664.72 million as at December 2018, as part of the Government’s plan to refinance Energy Sector debts. The issuance of the bonds resulted in the reduction of State Owned Enterprise (SOE) debts to its creditors by approximately GHc 5,453.20 million as at end 2018.

Total transfers from the ESLA Accounts towards the servicing of the ESLA bonds amounted to GH¢1,353.71 million.