Ecopetrol's Strategic Debt Management: Partial Prepayment of Loan Agreement

Ecopetrol S.A., the largest company in Colombia and one of the main integrated energy companies in the American continent, has announced a significant move in its debt management strategy. The company plans to partially prepay a loan agreement executed with international banks, demonstrating its commitment to improving credit metrics and increasing shareholder returns.

On October 18, 2024, Ecopetrol will prepay USD 500 million out of the USD 1,000 million outstanding balance of the loan agreement, which was executed in September 2023 and matures in September 2030. This prepayment is expected to reduce the Company's financial expenses and is a result of Ecopetrol's solid cash position and ability to manage and optimize its financing sources.

The prepayment will be funded with USD 250 million from an external credit executed with Sumitomo Mitsui Banking Corporation and USD 250 million from available cash on hand. This strategic move aligns with Ecopetrol's broader debt management strategy and financial objectives, as it aims to reduce interest expenses and improve its overall financial health.

The partial prepayment of the loan agreement is expected to have a positive impact on Ecopetrol's debt-to-equity ratio and overall financial leverage. By reducing its outstanding debt, the company will lower its interest expenses and improve its ability to meet future financial obligations and capital expenditure needs. This move also demonstrates Ecopetrol's commitment to maintaining a strong financial position and maximizing shareholder returns.

In conclusion, Ecopetrol's partial prepayment of the loan agreement executed with international banks is a strategic move that reflects the company's commitment to improving its credit metrics and increasing shareholder returns. This prepayment is expected to reduce financial expenses, improve Ecopetrol's debt-to-equity ratio, and enhance its overall financial health. As Ecopetrol continues to manage its debt effectively, investors can expect the company to maintain a strong financial position and deliver long-term value.