Digicel closes in on agreement from bondholders to extend debt
Billionaire Denis O'Brien's Digicel is edging toward an accord to reschedule a share of its debt after months of negotiations, according to a person familiar with the talks.
The company is offering new secured bonds maturing in 2022 in exchange for $2bn of unsecured notes originally due in September 2020 and may announce at least a portion of bondholders have taken up of the offer as soon as today, the source said.
Bondholders had baulked at elements of the original exchange outlined by Digicel in August. Digicel has since extended acceptance deadline and sweetened the terms. If the offer is not completely taken up by today's deadline, Digicel may offer a further deadline extension for the remaining investors, the source said.
Market fluctuations mean Digicel bonds due to be repaid in September 2020 yield 35pc, up from about 21pc in July.
Digicel is also negotiating a separate bond swap involving debt due in 2022. The deadline to accept that bond offer is December 21. The debt exchange offer now prohibits shareholder dividends, according to a Covenant Review report. It also restricts the ability to transfer funds to equity until the 2022 credit agreement has been repaid in full, and sets conditions for asset sale proceeds to be used to repay the agreement.
The revised debt exchange also restricts the ability of the company to incur new debt secured by the equity of Digicel, Covenant Review said.
The company declined to comment.