Business Irish

Wednesday 19 December 2018

Digicel gives bondholders until October 19 to mull debt deal

Dennis O'Brien, chairman and co-founder of Digicel Group Ltd
Dennis O'Brien, chairman and co-founder of Digicel Group Ltd
Donal O'Donovan

Donal O'Donovan

Irish-owned telecommunications group Digicel has extended until October 19 a deadline for its bondholders to accept an offer to swap $3bn (€2.59bn) of outstanding debt for new securities with later maturity dates.

It reflects resistance from lenders to an offer that will push back maturities on bonds scheduled to fall due in 2020 and 2022.

Akin Gump, a US law firm acting for some of the lenders, had said the terms offered by the company were unacceptable, ahead of this week's deadline. The same group of bondholders has hired US investment bank Moelis to also advise on the process. A second bondholder group is understood to be working with another law firm - Milbank, Tweed, Hadley & McCloy.

The deadline has now been extended but it is not yet clear what additional terms would satisfy bondholders. It is understood no specific enhancements have yet been tabled by bondholders.

However, they may seek some strengthening of the covenants or terms on the proposed new bonds, greater security for the debt, or an upfront cash payment - known as a consent fee - for agreeing to the refinancing.

The new deadline is 11:59pm, New York City time, on October 19. The original early tender deadline was September 14, later extended to September 28. Denis O'Brien-owned Digicel has proposed a deal that includes a new corporate structure in which new debt will be issued from two new holding companies inserted between its holding company Digicel Group Ltd and operating company Digicel Ltd.

The offer is to exchange $2bn of bonds due in 2020 that carry an 8.25pc interest rate, for up to $2bn of new bonds at the same interest rate but maturing in 2022. It wants to swap $1bn of bonds that mature in 2022, and pay a 7.125pc interest rate, for $1bn of bonds due in 2024 - with interest of 8.25pc paid in a mix of cash and so-called payment-in-kind (PIK) notes - on which the interest rolls up as new debt.

Irish Independent

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