Barbados Launches Consent Solicitation For Its US Dollar-Denominated Commercial Debt

BRIDGETOWN, Barbados, February 4, 2020 (CMC) – The Barbados government said, today, it had launched “consent solicitation”, regarding certain United States dollar-denominated debt instruments, issued by itself and state-owned enterprises, in a bid to amend the terms of these instruments.

A government statement said that, together with the Barbados Agricultural Management Co. Ltd (BAMC) and the Barbados Investment and Development Corporation (BIDC), they have each issued consent solicitation statements, respectively, addressed to holders of the government of Barbados Floating Rate US Dollar Bonds 2009-2019, the BAMC and BIDC fixed-rate, dual-currency, non-callable, sovereign-guaranteed bonds.

The statement said that the consent solicitation statements set out extraordinary resolutions, to amend the terms and conditions of each relevant instrument, which include a reduction of the outstanding principal amount of each instrument, by 25 percent, as well as a reduction of accrued and unpaid interest by 35 percent.

The capitalisation of the remaining 65 percent of accrued, but unpaid, interest, as of 1 October 2019, as well as the interest on each existing instrument, be set at a fixed rate of 6.5 percent per annum, to be paid by each issuer, semi-annually, in arrear, the statement noted.

It also noted the addition of a “natural disaster clause” that will enable the issuer to capitalise interest and defer principal maturities, due on the new bonds, for two years, in the event that Barbados is adversely affected by an earthquake, tropical cyclone or rainfall event, and a payment, above the relevant threshold, is made under its Caribbean Catastrophe Risk Insurance Facility Segregated Portfolio Company insurance coverage and a reduction of the denomination of each existing instrument to one US dollar.

“Holders, who wish to participate in the consent solicitations may appoint the government, BAMC or, as the case may be, BIDC, or their agents, as their proxy, with respect to all such existing instruments tendered, thereby to attend the relevant bondholder meeting to be held on 26 February 2020…and vote in favour of a relevant extraordinary resolution, by returning a duly-executed form of consent to the Ministry of Finance, Economic Affairs and Investment …on 25 February 2020,” the statement said.

It added that “subject to the extraordinary resolution having been duly passed, in respect of the relevant series of bonds, and the conditions set out therein being met, such extraordinary resolution will become effective on the closing date, which is expected to be 26 February 2020.

“Holders should be aware that the bank, broker, dealer, trust company or other nominee, through which they hold their existing claims, may have earlier deadlines for taking action, pursuant to the consent solicitations,” the statement added.