Mozambique turned down a restructuring plan by lenders, including Credit Suisse Group, for one of the state-owned companies at the centre of a hidden-debt crisis, the government’s financial advisers said.

"The proposal from the ProIndicus lenders has been considered by the Mozambique authorities and their advisers," Lazard Freres said. "However, as the lenders have been advised, the proposal does not meet the requirements of the authorities and is not considered a viable basis for a solution."

Credit Suisse was the lead arranger for a $662m loan to ProIndicus, a state-owned maritime-security firm, for patrol boats and other infrastructure in 2013. Russia’s VTB Bank arranged $118m of the debt. Donors and the IMF froze aid to the government after about $1.4bn of undisclosed loans, including the ProIndicus facility, were uncovered in 2016. The crisis over hidden debts led to the southeast African nation defaulting on bond repayments.

A group representing a majority of the holders of Mozambique’s $727m of Eurobonds presented a restructuring proposal for those instruments to the government earlier in 2018. Under the plan, bondholders would get access to state revenue from the gas projects firms plan to develop in the north of the country.

Lazard did not say whether the government had accepted or rejected this proposal and the bondholders’ legal adviser declined to comment.

Credit Suisse presented a restructuring proposal to the state that includes "significant financial concessions and features a number of provisions that provide ongoing flexibility" for Mozambique, the bank said.

The government "recently remarked that any solution would need to guarantee debt sustainability and may include instruments indexed to other values," the Swiss bank said. Bloomberg