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RPT-Cuba creditors offer "very significant relief" in debt proposal

(Repeats with no changes to text)

* Cuba's financial situation worsens

* Creditor group reached out to Cuba in late Jan

* Another chance to reach amicable understanding

By Karin Strohecker

LONDON, Feb 13 (Reuters) - Cuba's commercial creditors have
offered "very significant debt relief" in a proposal sent to
cash-strapped Havana in late January, according to two advisers
to the group, in a sign that holders of the defaulted debt are
ready to ramp up the pressure.

The communist-run island has seen its financial situation
deteriorate in recent months following the deepening of
Venezuela's economic crisis, lower revenue from commodity and
related exports, devastation wrought by Hurricane Irma and
tightening of business and travel restrictions by the U.S.
administration under President Donald Trump.

In 2015, Cuba reached a debt deal with members of the Paris
Club of creditor nations, but having not dealt with its
defaulted commercial creditors in the London Club means the
country is in effect shut out of international capital markets.

"The committee reached out to Cuba in late January," said
Rodrigo Olivares-Caminal, coordinator of the creditor group and
a law professor at London's Queen Mary University.

"We have made a good faith proposal to the government."

The creditor group holds obligations representing a face
value of $1.4 billion worth of Cuban debt and is made up of
three funds - Stancroft Trust Ltd, Adelante Exotic Debt Fund Ltd
and CRF I Ltd - as well as one commercial bank.

"We are trying to give the country another chance to reach
an amicable understanding with creditors," Olivares-Caminal told
Reuters. "This would give them very beneficial terms to remedy
their situation vis-à-vis capital markets."

While details of the proposal were confidential, it would
convey "very significant debt relief" said Lee Buchheit at
Cleary Gottlieb Steen & Hamilton LLP, one of the world's top
restructuring lawyers who was retained by the group last year.

CASH CRUNCH

"Cuba negotiated a generous debt relief package with most of
its bilateral creditors at the very end of 2015," Buchheit told
Reuters. "The London Club offer draws on certain features of the
deal with the bilateral creditors but in some respects it is
even more generous to the Cubans."

Under the 2015 deal, a number of Paris Club of creditor
nations forgave $8.5 billion of $11.1 billion official debt it
had defaulted on through 1986, plus charges. Repayment of the
remaining debt was structured over 18 years, and Havana paid the
first two instalments due since.

As part of the accord, some creditors were also preparing to
swap debt for an equity stake in local development projects.
This was seen as a breakthrough with Cuba agreeing for the first
time to give rich capitalist countries equity in development
projects in sectors like manufacturing and agriculture.

Cuba does not publish up-to-date information on its foreign
debt, citing a need to keep sensitive economic information from
Washington, which it has long accused of trying to disrupt its
financial and trade relations under a comprehensive U.S.
sanctions regime.

However, the creditor group estimated it was holding at
least 50 percent of Cuba's private sector debt. Olivares-Caminal
added the proposal would be open for a limited period of time,
though declined to give further detail.

Cuba's cash crunch and lower oil supplies from Venezuela
have forced the government to slash imports and reduce the use
of fuel and electricity.
(Reporting by Karin Strohecker, Editing by William Maclean)

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