Digicel gets extra time to hammer out debt deal

Broad terms of the agreement, yet to be finalised, will see Denis O’Brien hand over the majority stake in his Caribbean telecoms empire

Digicel founder Denis O’Brien. Photo: Tony Gavin

Donal O'Donovan

Digicel and its bondholders have extended by 15 days a so-called grace period allowing extra time to conclude talks on its debts, with potential for a further 15 days.

In a statement on Friday, the company said it now has agreement in principle from representatives of two bondholder groups representing a combined 75pc of its bonds for a debt-for-equity swap deal.

The broad terms of the agreement which is yet to be finalised will see Denis O’Brien hand the majority stake in his Caribbean telecoms empire to bondholders in exchange for a debt reduction of $1.8bn (€1.66bn) for the business.

Mr O’Brien will remain a director of Digicel and one of the biggest shareholders after the debt swap, but one among a large group of investors.

Digicel had initially sought a debt extension with holders of $925m of bonds that fell due at the start of this month, but with further major repayments looming in 2024 and 2025 and no end in sight to the economic crisis that has gripped Haiti, one of its biggest markets, talks shifted to a more comprehensive restructuring.

The extended grace period and agreement in principle with a second bondholder group, in addition to a committee representing bondholders who had already backed a deal, paves the way for a consensual debt agreement.

Under the proposed debt-for-equity agreement, which remains subject to final agreement, Digicel’s bondholder debt will be slashed and its annual interest bill will fall by $110m – a comprehensive debt restructuring.

If finalised it will see the group effectively recapitalised by bondholders in exchange for shares.

On Friday, Digicel said the extension of the grace period will facilitate the finalisation of definitive documents arising from constructive and ongoing discussions between the sides.

In the context of the ongoing talks, Digicel said it had elected to defer making the interest payment on some bonds that would otherwise fall due on April 1, 2023, and will enter into the 30-day grace period permitted under the indenture governing these notes.