Denis O’Brien’s Digicel has announced that it has been engaged in discussions with certain of its debtholders regarding potential exchanges of existing debt for new securities.
A deal could cut Digicel’s debt without any additional repayments but leave bondholders nursing a loss.
If the deal goes ahead new debt will be issued at a discount to what’s currently owned and swapped for the outstanding bonds.
However, it is understood talks may be focused on a deal to exchange bonds for new debt issued at a discount to the face value owed but at premium to the level where bonds now trade .
Results last month showed that the far-flung telecoms operator - which has operations from Jamaica to Papua New Guinea - recorded net leverage of about 6.8 times earnings, with the company's much watched net debt little changed at $6.8bn.
Digicel has long targeted debt reduction, but hopes of cutting that leverage ratio through growth or by paying down significant sums with the proceeds of disposals have failed to materialise however.
A deal to exchange old bonds for new could be executed through a scheme of arrangement – depending on the level of acceptance.
In a statement, Digicel said it has not yet reached an agreement with the debtholders and intends to continue to engage in such discussions. “No assurances can be provided that an agreement will be reached,” the company said.