Business Irish

Tuesday 19 November 2019

Digicel extends bond-swap deadline as talks continue

Digicel founder Denis O'Brien
Digicel founder Denis O'Brien
Gavin McLoughlin

Gavin McLoughlin

Denis O'Brien-owned Digicel has again extended the deadline for a swap offer it has made to certain bondholders,

The new deadline for the deal is November 2 - with the deadline having previously been extended to this coming Friday.

The telecoms business is in negotiations with a group of the bondholders who are looking for improved terms.

Digicel said yesterday that "constructive discussions" continue.

Under the offer, bonds with an 8.25pc interest due in 2020 would be swapped for new bonds due in 2022, also with an 8.25pc interest rate.

Another class of bonds, due in 2022 and with a 7.125pc interest rate, would be swapped for new bonds due in 2024, with an 8.25pc interest rate. Cash interest would be 7.125pc and payment-in-kind interest (paid in notes) would be 1.125pc.

After the offer was made a group of bondholders seeking better terms was formed - with investment bank Moelis & Co and law firm Akin Gump coming on board to advise the group.

Akin Gump put out a statement saying the terms on offer were unacceptable, based on feedback it had from bondholders.

It said the holders of 60pc of the 2020 and 2022 notes had agreed not to accept the offer - and were willing to engage in "constructive discussions regarding the possibility of an alternative proposal".

The group asked other bondholders to refrain from accepting the offer. One of the issues that is believed to have emerged is an element of the plan that would see the new 2024 notes subordinated to other parts of Digicel's capital structure.

Completing the deal would give Digicel more breathing space as it looks to reduce its debt burden.

The company offers telecommunications and entertainment services across a number of countries in the Caribbean, Central America and Asia Pacific.

That means it receives payments in local currencies, but with debt denominated in the dollar, the payments it receives are worth less in dollar terms when the dollar strengthens, as it has been doing this year.

That puts pressure both on earnings and on debt repayments.

The company, which abandoned plans for a stock market flotation in 2015, last year embarked on a transformation programme known as Digicel 2030.

It outlined plans to restructure the organisation, centralising certain back office functions in a number of hubs in a move that it said would see a 25pc reduction in its global headcount.

The company also said it wanted to upgrade its networks - a move designed to help support customers in consuming streaming products like Netflix or Spotify.

Irish Independent

Also in Business