Ecuador to Offer Bond Holdouts Less Than 35 Cents

By Stephan Kueffner

June 17 (Bloomberg) -- Ecuador will offer holdouts from its buyback of defaulted debt less than the 35 cents on the dollar paid to holders who tendered their securities earlier, Finance Minister Maria Elsa Viteri said.

Bondholders who for regulatory reasons weren’t able to participate in the buyback by the June 3 deadline will still be able to sell their bonds at the 35-cent price, Viteri told reporters today in Quito.

“For the rest of holders, if any of them would like a definite solution at some moment, that will have to be at a revised price that I’m working on right now,” Viteri said. “It would be inferior to 35” cents.

The government estimates that most of the bondholders who didn’t participate are Italian, Viteri reiterated. Through the buyback, Ecuador retired 91 percent of its $3.2 billion bonds due 2012 and 2030, close to a third of its foreign debt, after declaring a default in December.

Ecuador won acceptance for its 35-cent offer from 91 percent of the bondholders, Viteri said on June 11.

Viteri today said she has spoken to officials at Italy’s National Corporations and Bourse Commission about extending the original bond offer to holders there.

“We understand that Italian bondholders have begun to contact their regulator and are interested in getting a solution as soon as possible,” Viteri said.

Ecuador will continue to try to reduce its debt load, mostly owed to foreign governments and multilateral lenders, through dialogue, she added.

Viteri spoke after signing an agreement with Spanish diplomats that writes off $30 million Ecuador owes that country in exchange for pledges to invest that amount in local schools and health programs.