7. Debt Restructuring
Under ERTU's recommended structure for the split ECNZ's existing debt will be allocated amongst the new SOEs according to the following arrangements:
- ECNZ's existing debt will remain with ECNZ as a residual entity;
- as part of the split ECNZ will enter into Loan Facility Agreements with the new SOEs under which ECNZ will lend to each of the new SOEs the amount of debt funding allocated to each of them on terms which, in total, match ECNZ's existing debt obligations;
- the Crown will guarantee ECNZ's existing debt and swap obligations. This guarantee will prevent an event of default under ECNZ's existing funding documents being triggered by the split;
- payments from the new SOEs to ECNZ under the Loan Facility Agreements will fund ECNZ's payment obligations to its existing lenders; and
- each SOE will indemnify the Crown in the event that default under its Loan Facility Agreement triggers payment by the Crown under the guarantee.
These arrangements are summarised in the following diagram:
ECNZ has two principal long-term funding sources: a domestic bond programme and a Euro-medium term note programme. The bulk of existing debt which will be transferred to the new SOEs is provided under these programmes as follows:
| | Maturities | Amount ($NZ) |
|---|
| Euro MTNs | 1999-2003 | $256 m |
| Euro MTNs | 2004-2005 | $27 m |
| Domestic Bonds | 1999-2004 | $675 m |
| Domestic Bonds | 2005-2009 | $16 m |
| Total | | $974 m |
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