Ecobank Repays Its $400m Convertible Debt Upon Maturity

Ecobank Transnational Incorporated (ETI) said it has redeemed its 5-year $400 million convertible debt following its maturity. The debt instrument was issued in September and October 2017.  

Ecobank explained via a corporate disclosure at the Nigerian Exchange Limited (NGX) on Tuesday that holders of the convertible debt chose not to exercise their option of converting their holdings into ordinary shares during the conversion period between October 2019 and October 2022.

Consequently, ETI redeemed the debt at 110% of the principal amount, in line with the terms of the convertible debt agreements.

The statement by ETI said the repayment did not affect its regulatory capital since the debt was amortised for capital in 2021.

Ecobank Group had in 2017 received shareholders’ approval to raise $400 million in convertible bonds to boost the Group’s capital position.

At the 29th yearly general meeting and extraordinary meeting, held in Lomé, shareholders of Ecobank Transnational Incorporated (‘ETI’), the parent company of the Ecobank Group approved the issue of up to $400 million in convertible bonds.

According to the bank, the convertible bond issue will have a maturity of five years and a coupon of 6.46 per cent above 3-month LIBOR, with an option to convert at an exercise price of 6 US cents during the conversion period.

Addressing shareholders at the event, former Ecobank’s Group Chairman, Emmanuel Ikazaboh, explained that the bonds will be on offer to all Ecobank shareholders on identical terms shortly.

He added that the proceeds have been earmarked to repay the bridging finance required to create a Resolution Vehicle to manage Ecobank’s legacy loan portfolio and optimise the maturities of the Group’s debt portfolio.

“We are delighted with the strength of the support shown for the issue by our existing shareholders, as it vindicates the vigorous action taken to address our challenged legacy assets, as well as indicating their confidence in Ecobank’s future. Nevertheless, it is a matter of great regret that the board was unable to recommend the payment of a dividend in respect of 2016.

“Ecobank’s senior management is united in its firm resolve to work urgently, yet diligently, to reinstate cash dividends as soon as ETI’s financial position permits.”

Furthermore, Ikazaboh explained that by segregating these challenged legacy assets from Ecobank Nigeria’s core assets, management will be able to focus on delivering the desired results.

He added that the strategy would also improve Ecobank Nigeria’s liquidity and help in the effective management of capital, thereby accelerating the bank’s turnover.