Wednesday, May 27, 2009

Ecuador today announced that it would up its haircut offer on the Global 12s and 30s bonds and pay 35c on the dollar instead of its baseline 30c

TO BE NOTED: From Inca Kola News:


Studmuffin pays 35%

Ecuador today announced that it would up its haircut offer on the Global 12s and 30s bonds and pay 35c on the dollar instead of its baseline 30c, the news coming after FinMin Viteri had done tea'n'buns with major holders in London and Paris. The press release in English is on this link right here so go look for yourself.

If you're going to accept the offer you have until June 3rd to deposit your bonds. The big question now is how many holdouts there will be, as the 5% gravy added today (largesse thanks to the recent pop in the price of crude more than a long-term cunning plan, I'd wager) is clearly designed to sway the fence sitters over the The Way Of The Muffin. The number being bandied about Quito today is 90% and if they really get that many the daring holdouts will be left with a long, long wait.

Telling you now, I doff my cap to Studmuffin on this one. If he pulls this off and retires all this debt at a 2/3rds haircut without getting bogged down á la Argentine in the New York courtrooms (as is now likely) he'll have done a great favour to his country going forward. I had my serious doubts all the way through this but I'll be happy to eat humble pie.

PS: Here's a Bloomie report on the 35% news and here's Felix Salmon with his take."

"Date: 26 May 2009
Clearing Priee for the 2012 Bonds and 2030 Bonds and Opportunity for Holders who
submitted Offers above the Clearing Priee to revise their Offers to a priee equal to the
Clearing Priee
The Republic is pleased ta announce the Clearing Priees for Bonds accepted for purchase
pursuant ta the Invitation made on 20 April 2009. The 2012 Bonds Clearing Priee is $350 and
the 2030 Bonds Clearing Priee is $350 (in eacb case this is expressed as a priee per $1,000
face amount). As holders are aware, as a result of the prepayment of $740m made in March
2006, there is a pool factor of 0.408 applicable ta the 2012 Bonds and this will be applied
against the original $1,000 faee amount of these Bonds ta ensure that a priee of 35c on the
dollar is paid in respect of the current outstanding face amounts of the se Bonds accepted in the
Invitation. The Clearing Priees for the Bonds reflect the resources of the Republic and are
responsive to the majority of the Offers received.
The Republichas decided ta provide Raiders who submitted Competitive Offers relating to a
Series of Bonds above the applicable Clearing Price the opportunity to participate by revising
these Offers ta a priee equal to the applicable Clearing Priee.
Any Holder of Bonds wishing to submit such a revised Offer (a "Revised Offer") must ensure
that the direct participant in Euroc1ear or Clearstream who submitted the Letter of Transmittal
applicable to its Bonds sends a duly signed fascimile ta the Tender Agent and, if applicable,
the Luxembourg Agent at or before 6.00 p.m. CET on 3 June 2009 attaching the original
Letter of Transmittal amended in manuscript to indicate:
(a) the new Reference Code genetated by Euroc1eat or Clearstream upon the submission of
blocking instructions;
(b) the final Clearing Priee of the respective Bonds as set out above; and
(c) the Number of Bonds and Aggregate Face Amount to whieh the Revised Offer is ta
This will allow such Bonds to be appropriately identified.
RaIders should be aware that following this announcement of the Clearing Priee of the
respective Bonds, Euroclear and Clearstream will unblock the Bonds of those Holders who
submitted Competitive Offers above the applicable Clearing Priee. Therefore, if a Holder
wishes ta submit a Revised Offer, such Holder will need ta take iuta account that the
necessary Bond Instructions to submit a Revised Offer are delivered to and received by \
- t -
Euroclear and Clearstream, in accordanee with their normal procedures on or prior ta the
deadlines established by each of those clearing systems. Holders of Bonds who wish ta submit
a Revised Offer should therefore contact the relevant clearing system or their custodians as
saon as possible with the instructions necessary ta enable Euroclear or Clearstream, as the
case may be, ta generate a new blocking instruction reference code and an amended Letter of
Transmittal with a Revised Offer ta be submitted in respect of its Bonds.
The intention is ta settle the purchase of any Bonds which are the subject of a Revised Offer
on 12 June 2009 and accordingly, in relation ta Bonds that are the subject of a Revised Offer
only, referenees in the Invitation ta the Settlement Date shaH be read as references ta 12 June
For the avoidance of doubt, in respect of Bonds validly submitted pursuant ta Letters of
Transmittal with Offer Priees originally specified at or below the applicable Clearing Priee,
the Settlement Date shaH remain 29 May 2009.
ln aH other respects, the terms of the Modified Dutch Auction described in the Invitation shaH
continue ta apply and, except as revised in this communiqué, such tenns shaH apply ta
Revised Offers.
ln view of the Republic's decision ta give the opportunity ta Holders who submitted
Competitive Offers above the applicable Clearing Priee ta offer their Bonds at the Clearing
Priee, the Republic will, pursuant ta the terms of the Invitation, issue information no later
than 12 June 2009 relating ta the aggregate amount of Bonds acquired.
Bolders of Bonds should be aware that, foHowing the settlement of the purchase of the Bonds
pursuant ta the Revised Offer and with the exception of any offer at the Clearing Priee of the
respective Bonds that the Republic may make, at its discretion, in any jurisdiction where the
Joint Dealer Managers have been unable ta contact Holders for legal or regulatory reasons,
the Republic will not offer equal or more favourable terms ta those being offered ta Holders
of Bonds presently.
Any Holders of Bonds who did not submit an Offer previously and would wish ta do sa may
cont~z'Vd Frères Banque at 121 Boulevard Hausmann, 75382 Paris, Cedex 08, France,
TelebhOne\-H+~f\1 44 1J 0030 (Reference: The Republic of Ecuador Invitation).
L\ ~1
Minister osfa FVi~itn~cei ÂocfaitthuerrRi epublic of Ecuador
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