22 July 2022
Paramaribo, Suriname: From July 11 to July 19, 2022, representatives of the Republic of Suriname (the “Republic”) held meetings with members of the Euronote Creditor Committee that had entered into non-disclosure agreements with the Republic (the “Restricted Investors”) both in Paramaribo and virtually, to discuss the potential terms of a restructuring of the Republic’s two outstanding eurobonds (the 9.875% Notes due 2023 and 9.25% Notes due 2026, together the “Bonds”).
In the course of the meetings and following discussions aimed at bridging the gap between the proposals each of the parties had published in April 2022, the Republic delivered to the Restricted Investors a revised proposal describing the terms of a fixed income instrument that could be issued in exchange for the Bonds. The Republic believes its proposal complies with the approved IMF programme and achieves the Republic’s debt sustainability goals. The Restricted Investors did not accept the Republic’s revised proposal, and presented an alternative restructuring scenario for discussion with regard to a fixed income instrument, together with certain proposed adjustments to the assumptions underlying the parameters of the IMF programme that would align with the presented restructuring scenario. The Restricted Investors stated that the alternative restructuring scenario they presented should not be regarded as a proposal. The Republic’s proposal and the Restricted Investors’ restructuring scenario are shown in Annex A
In addition to the potential terms of the fixed income instrument, the parties discussed the potential terms of a Value Recovery Mechanism (“VRM”) that could be offered to holders of the Bonds as compensation for the proposed nominal haircut on the principal amount of such Bonds and proposed interest reduction. Despite the absence of an agreement in principle at this time, substantial progress was made towards agreeing the legal structure of the VRM. The proposed terms of the VRM offered by the Republic and the Restricted Investors, respectively, over the course of the discussions are attached in Annex B hereto.
The Republic and the Euronote Creditor Committee, through their respective advisors, intend to continue discussions with the goal of reaching an agreement in principle on the terms of a debt restructuring.
|Republic Proposal||Restricted Investors Restructuring Scenario|
|Tenor||10 years||10 years|
|Nominal Amount||33% nominal haircutRecognition of Past Due Interest and accrued interest at contractual rate until 31 December 2021. 8% accrual rate onwardsNew Instrument Amount: USD 548.9m||20.0% nominal haircutRecognition of Past Due Interest and accrued interest at contractual rate until restructuring date|
|Average Maturity||7.0 years||8.0 years|
|Principal Repayment||Sinkable: 7 equal annual repaymentsFirst payment date: 31 July 20261||Sinkable: 5 equal annual repaymentsFirst payment date: 31 July 20281|
|Interest Schedule||First coupon payment date: 31 January 20231Coupon payment dates: 31 January and 31 July1From July 2022 to July 2024: 2.00%From July 2024 to July 2026: 7.00%From July 2026 to maturity: 8.00%||8.75% straight coupon paid semiannually Interest payment dates to be determined.|
(1)Based on reference date of 31 July 2022 for restructuring date
Value Recovery Mechanism (VRM) Proposals
|Republic Proposal||Restricted Investors Proposal|
|Structure of transaction||Exchanging Bondholders will exchange the remaining portion of their claims (the “Recognized Nominal Haircut”) into a new, tradeable value recovery instrument, under New York law documentation.||Exchanging Bondholders will exchange the remaining portion of their claims (the “Recognized Nominal Haircut”) into a new, tradeable value recovery instrument, under New York law documentation.|
|Notional Amount of VRM||The amount of the Recognized Nominal Haircut||The amount of the Recognized Nominal Haircut|
|Perimeter of applicable revenue base||Royalty Oil||Royalty Oil|
|One-off floor||Government Royalty Oil revenues remain at the exclusive disposal of the Republic up to the point where aggregate Royalty Oil revenues exceed USD 500 million||Government Royalty Oil revenues remain at the exclusive disposal of the Republic up to the point where aggregate revenues exceed USD 50 million|
|Interest accrual rate on the VRM||Interest accrual rate equal to the average coupon on the fixed income instrument||12% until the start of the cashflow (post-one-off floor) 8.75% after first VRM cashflow until VRM holders have recovered 50% of the accrued notional balance of the VRM. Then, 7% until the end of the VRM|
|VRM End Date||31 December 2035||VRM end date TBD|
|Cap on VRM payments||A hard cap on payments is needed, with the Maximum VRM Payout being the lesser of (i) $X and (ii) the Recognized Nominal Haircut plus an amount corresponding to accrual of specified interest through the date of calculation.||No hard cap|
|Prepayment option||Prepayment option via overallocation||Prepayment option via overallocation|
|Put Event||Put event in enumerated circumstances if Republic breaches terms of VRM||Put event in enumerated circumstances if Republic breaches terms of VRM|
|Legal payment structure||Payments under the VRM are to be made into an offshore escrow account, and the appointed Allocation Trustee is to further transfer allocations to VRM Holders into an offshore VRM Account owned by the appointed VRM Trustee for the benefit of VRM Holders, with the remainder transferred to the Republic||Payments under the VRM are to be made into an offshore escrow account, and the appointed Allocation Trustee is to further transfer allocations to VRM Holders into an offshore VRM Account owned by the appointed VRM Trustee for the benefit of VRM Holders, with the remainder transferred to the Republic; with a security interest in favor of the VRM Trustee over the offshore escrow account if a Put Event occurs and is not cured|
 NB The Restricted Investors do not agree with the size of the Recognized Nominal Haircut in the Republic’s Proposal.