Wednesday 26 October 2016

O'Brien's move to float Digicel will reduce its bond market exposure

Published 28/06/2015 | 02:30

Denis O'Brien
Denis O'Brien

Three men with Dublin homes within 200m of each other have built up three enormously successful companies backed by close on $18bn in debt raised from the bond markets.

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Denis O'Brien's communications group Digicel, Paul Coulson's tin can and glass bottle manufacturer Ardagh and Domhnal Slattery's aviation leasing firm Avolon have now all turned to the stock markets to repay some of those borrowings and rebalance their corporate debt profile.

Last Friday O'Brien's Digicel announced IPO plans, three days after Paul Coulson's Ardagh said it would raise €2bn in debt and equity by floating its Oressa metals business in New York later this year.

Domhnal Slattery - who like Denis O'Brien served as a personal assistant to aviation pioneer Tony Ryan - floated last December raising $278m from investors.

Moving to the stock markets reduces their dependence on debt markets and gives them the flexibility to raise more money from an entirely different pool of potential investors.

This is a particularly useful move for O'Brien. His Digicel is "evolving" from selling mobile phone calls and data services to becoming a far broader company, offering everything from television to cloud storage and mobile banking as well as its core mobile telephony services.

This is expensive. Digicel has spent $1.5bn over the last three years. The company is sitting on $6.5bn in debt. With bond markets looking to be in the latter stages of an unprecedented bubble, it makes sense to raise money on the stock markets to pay down debt and build up a war chest for acquisitions and working capital.

Flotation documents for the company noted: "Digicel is in the process of evolving from a pure mobile telecommunications company into a leading total communications and entertainment provider, while remaining focused on improving its competitive position in each of its markets by providing customers with access to better mobile technology, more innovative products, a superior customer experience and better value compared to Digicel's competitors.

"This evolution includes the expansion of its product offerings through developing its Business Solutions services and entering Cable TV & Broadband businesses, which have lower penetration rates than the Mobile business in Digicel's markets," Digicel added in its flotation registration documents.

Sunday Indo Business

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