Digicel increases debt deal to $1.25bn
Strong demand for its loans among investors will see Denis O’Brien’s Digicel extend its debt maturity profile at lower than expected pricing in a deal shifting more of its borrowings from bonds to term loans.
The deal by Digicel’s International Finance subsidiary, will see a planned refinancing of $935m (€855m) of term loans increased to around $1.25bn on the back of investor demand.
The refinancing was launched primarily to replace $856m of secured loans falling due between March 2018 and March 2019 with longer-term debt.
The extra funds now being raised will go to repay an additional $250m of senior bonds that carry a 7pc interest rate
and fall due in early 2020.
The new financing is priced at an interest rate of 3.75pc over Libor. Pricing is a quarter of a percent lower than the company’s bankers Citi, JP Morgan, Barclays, Credit Suisse and Deutsche Bank initially guided when the deal went out to the wider market last week.
The syndicated loan was underwritten by the five banks and marketed to investors in the loan market. Lower borrowing costs and the increased size of the deal reflect investor appetite.
The package will push Digicel’s next substantial debt repayment deadline out to late 2020. It includes a $100m revolving credit facility – the corporate equivalent of an overdraft that can be drawn down and repaid as the company requires.
It is understood that up to $15m of the new financing can be used by Digicel to pay for the acquisition of IDOM Technologies announced at the end of last week. Financial terms of that deal were not disclosed.
When it announced the IDOM Technologies deal, Digicel said the new unit provides communications services to more than 800 business and public sector customers in the French off-shore territories of Martinique, Guadeloupe, French Guiana and La Reunion.
IDOM’s 265km of fibre optic network will bring Digicel Group’s total fibre footprint to 6,000km. Digicel said it will bring its full portfolio of products and services to the markets where IDOM Technologies operates. Digicel is active in 32 markets across the Caribbean and Pacific Ocean and is increasingly moving from its original mobile phone services to offer a wider range of communication services to consumers and business customers.
The IDOM deal is Digicel’s first acquisition since it launched a group-wide rationalisation programme dubbed “Digicel 2030” earlier this year. That programme will see around a quarter of Digicel’s 6,000 worldwide jobs cut over 18 months as back-office functions are centralised.