Chile’s Colbun May Renegotiate Debt

Chilean electric power and natural gas utility Colbun issued yesterday a waiver requesting that one of its bank debt covenants be suspended until April, according an executive familiar with the situation. The company may consider using the next three months to renegotiate terms on up to $700m in outstanding debt, says the person. Contacted by LatinFinance, Colbun’s CFO Jaime Fuenzalida Alessandri confirmed a notice had been sent out to banks but declined to elaborate. He said any discussion on debt restructuring was still in its early stages. Colbun has a $320m syndicated loan led by Calyon which, in the first three quarters of last year, paid an average margin of 5.54%, according to a statement with the SVS. Banco Chile, Santander, WestLB, Banco Credito y Inversiones, SCH Overseas Bank and BBVA are also participants. In 2006, the company extended the final maturity date of the amortizing loan by two years to 2011 from 2009. The company also has three series of outstanding UF-denominated local bonds. Analysts in Chile tell LatinFinance they have been expecting Colbun to trip its interest coverage ratio covenant when its Q4 financials came out. The deteriorating ratio is a result of a severe drought which led to lower generation capacity, and, as a result, lower Ebitda. Expenses also rose due to the lack of Argentine natural gas. The utility had to use oil to power its generation, which led to a surge in operational costs, thus affecting interest coverage, say the analysts.