December 20, 2017 / 2:52 PM / a year ago

Chad, Glencore talks to renegotiate $1 billion loan fail again

LONDON (Reuters) - A delegation from Chad and commodities trader Glencore (GLEN.L) failed to reach a deal to restructure a more than $1 billion (£746.09 million) oil-backed loan after another round of talks in Paris that ended this week, a source familiar with the matter said.

FILE PHOTO: The logo of Glencore is seen in front of the company's headquarters in Baar, Switzerland, September 7, 2012. REUTERS/Michael Buholzer/File Photo

Glencore lent the west African country’s state oil firm SHT (Societe des Hydrocarbures du Tchad) about $1.45 billion in 2014 to be repaid with crude oil. The loan was subsequently syndicated with several banks.

The loan was restructured once in 2015 after the crash in global oil prices but Chad is struggling to repay the debt and funds from the International Monetary Fund hang upon reaching new terms.

Spokesmen for SHT and Glencore declined comment. Talks would continue though the parties had hoped the latest round would yield an agreement.

Chad began the latest round of discussions with Glencore and other lending banks last week.

The two sides previously met in Paris in early November and Chad’s finance minister was sacked the following week after no agreement was reached.

Under IMF pressure, the source said Chad was seeking a longer maturity, of 12 years, and a lower interest rate of 5 percent than what was last proposed by Glencore and the other lenders in November.

While the longer time frame was agreed to, the interest rate and a Glencore commission remain sticking points, the source said, as Glencore wants to stick to a 6.75 percent rate.

Previously, Glencore and the other lenders had offered to extend the maturity to 2025 from 2022 and include a grace period on the principal, among other concessions.

To gain an edge in negotiations, Chad decided to redirect crude previously allocated to Glencore in a marketing agreement to ExxonMobil instead starting from January, which has made negotiations fraught.

Reporting by Julia Payne, editing by Louise Heavens and Adrian Croft

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