Bondholders in the Kaduna State N8.5bn 12.5 per cent coupon bond have approved plans to restructure it from bullet repayment to amoritising repayment of principal.

They unanimously gave the approval at a bondholders’ sensitisation meeting held in Lagos on Friday, following a proposal by the Kaduna State Government, which is the issuer.

The bondholders gave the issuer approval for the balance in the Sinking Fund Account to be utilised towards the reduction of outstanding principal and for the rest of the bond repayments be restructured to semi-annual payments; consisting of interest payment and amortisation of principal for the remaining two years to expiration – that is September 1, 2013 to August 31, 2015.

The issuer explained that, “the objective of the restructuring is to achieve a reduction in the effective interest cost of the bond programme. Savings from the restructuring is to enable the Issuer fund other urgent capital requirements in the State.

“The restructuring is a win-win situation for both the bond holders and the state government,” the Attorney-General and Commissioner of Justice, Kaduna State, Jonathan Adamu, said, adding, “In Kaduna State, we are concerned on how we utilise our funds. This will help us optimise how best we utilise our funds in future.”

Concerning the current status of the bond, those present at the meeting were informed that cumulatively, bondholders to date have received a total of N2.65bn.

They were also told that the issuer currently retains the entire principal of N8.5bn outstanding excluding coupon payments till August 31, 2015 and that current irrevocable standing payment order deduction was N248.394ms.

According to the issuer, the Securities and Exchange Commission had requested the consent of the Trustee and bondholders, after it was notified of the plan to restructure the bond.

Highlights of the revised amoritisation schedule show that the effective date for the implementation of the restructuring is August 31, 2013. Pay out to bondholders is expected to commence in August 2013, while effective pay-out to the bondholders on August 31, 2013 is N2.03bn. That is N1.5bn principal plus N531.250m coupon.

Balance in the Sinking Fund account as at April 13 is N6.538bn, while outstanding balance on principal effective from September 1, 2013 will be N6.99bn. The issuer said this would be paid over 24 months. The coupon will remain unchanged at 12.5 per cent as well as all other terms and conditions of the bond.

Apart from the bondholders, representatives of UBA Trustees Limited, who are trustees to the bond, and BGL Plc, the financial advisers, also attended the meeting.

 

Source: Punch (by Simon Ejembi)