White & Case Advises the Largest Bondholder Group in Ecuador's US$17.4 Billion Sovereign Debt Restructuring

Global law firm White & Case LLP has advised the Ad Hoc Ecuador Bondholder Group (the Group), the largest group of the Republic of Ecuador (Ecuador) bondholders, in the successful restructuring of the country's US$17.4 billion of external debt. The Group comprised major institutional investors who collectively held in excess of 53 percent of Ecuador's bonds.

The restructuring related to 10 series of US dollar-denominated bonds, maturing between 2022 and 2030. The Group reached an agreement in principle with Ecuador through good faith negotiations in the course of only a few weeks. Ecuador launched its exchange offer and consent solicitation, reflecting the agreed restructuring terms and conditions on July 20. The offer received the support of more than 98 percent of eligible bonds and the transaction successfully settled on September 1, 2020, with the issuance of a package of three new bonds maturing in 2030, 2035 and 2040 under a new master indenture.

The transaction marked the first successful sovereign debt restructuring since the outbreak of COVID-19, and the terms of the new bonds provide Ecuador substantial debt relief while preserving bondholder value. In addition to the commercial terms, the Group successfully negotiated innovative enhancements to the bonds' legal framework, including to the standard-form collective action clauses recommended by the International Capital Markets Association.

"We were delighted to have the opportunity to advise the leading group of Ecuador bondholders in this milestone restructuring transaction," said White & Case partner Ian Clark, who co-led the transaction. "Working collaboratively with Ecuador and its advisors to address the devastating financial impact on that country brought by COVID-19 and the collapse of international oil prices, and relying exclusively on new 'remote working' technologies due to the pandemic, the group of bondholders we represented provided billions of dollars of much needed cash flow relief to Ecuador. This transaction shows clearly how the private sector, acting responsibly and in coordination with the IMF and other official and multilateral lenders, can help find constructive solutions to complex sovereign debt crises."

The White & Case team that advised on the transaction included partners Ian Clark (London), Thomas MacWright (New York), Brian Pfeiffer (Miami), and associate Dimitrios Lyratzakis (London).

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