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Tuesday, November 17, 2009

Ecuador To Launch Buyback Offer In Italy For 2012,2030 Bonds

(Dow Jones) Nov 4, 2009 --Ecuador's Finance Ministry said Wednesday that Ecuador has obtained approval from the Commissione Nazionale per le Soceita e la Borsa, or CONSOB, in Italy, to launch a public tender offer in Italy on November 5 to holders of its Global 2012 and 2030 bonds to participate in a cash buy-back.

Last December, President Rafael Correa's government refused to pay the interest on its 2012 and 2030 bonds, saying they considered such payments "illegal" and "illegitimate."

On April 20, the government launched a modified Dutch auction for the 2012 and 2030 Global bonds. It originally offered a minimum price of 30 cents on the U.S. dollar to buy back the bonds, but later raised that to 35 cents on the dollar.

Last June, the government said that it had spent $900 million for 91% of the Global 2012s and 2030s, and about $95.37 million of the Global 2012s and $194.4 million of the Global 2030s remain in the market.

According the government, Lazard Freres Banque and Lazard Freres & Co. LLC, as joint dealer managers, were not permitted to directly contact holders of the bonds in Italy, due to regulatory restrictions.

"The Republic (of Ecuador) is now launching the Italian offer for the benefit of holders of the bonds in Italy in order to give the same opportunity to tender their bonds to the Republic as holders of the bonds in other countries," the Finance Minister, Maria Elsa Viteri, said in a press release.

The press release added that "holders of the bonds should be aware that the Republic (of Ecuador) has no intention of launching other invitations or offers aimed at either holders of the 2012 or 2030 bonds on equivalent or more favorable terms to those of the Italian Offer," the release said. "Neither does the Republic intend to pay interest or principal on either the 2012 bonds or 2030 bonds."

The Republic, the statement said, looks forward to restoring normal relations with the international investor community.

According to Viteri, the Italian offer is designed to assist in allowing both the bondholders and Ecuador to close, on an acceptable basis, "a very challenging period in the Republic's external debt history."

The press release added that the Italian offer requires an exceptional use of resources, and despite the negative impact of the global financial crisis and the decrease in growth of the Ecuadorean economy, the government has set aside the resources.

Ecuadorean analysts have said that the sharp "haircut" that Ecuador effectively forced bondholders to accept has cut off the country from private overseas capital markets.

-By Mercedes Alvaro, Dow Jones Newswires

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