Wednesday 23 January 2019

Digicel sets out to woo investors with roadshow

Businessman Denis O’Brien. Photo: Bloomberg
Businessman Denis O’Brien. Photo: Bloomberg

Dara Doyle

For bondholders in Irish billionaire Denis O'Brien's mobile-phone empire, it's been a rollercoaster few months. Now, they're looking for reassurance that the rough ride is almost over.

Within the next month, Digicel executives will brief investors worldwide, introducing them to its new management and beginning to lay the ground for an eventual $2bn (€1.62bn) refinancing of a bond maturing in 2020, according to a person familiar with the matter.

The so-called 'non-deal roadshow' comes after the 2020 yield rose as high as 15.4pc from 8.5pc - making it the worst emerging markets performer this year.

"What needs to happen is for the company to come out now with something positive," said Till Moewes, an analyst at Schroder Investment Management, which holds a share of the debt.

"They need to produce some new positive news to stop this negative chain reaction."

Digicel has a history of refinancing bonds early, and some investors might have hoped the company would move to redeem the 2020 bond this year. While no final decision has been taken, that probably won't happen soon should yields remain close to their current level, even after a recent dip, according to the person who asked not to be identified.

Businessman Denis O'Brien, the single biggest shareholder in INM, which publishes this newspaper, built his mobile phone empire, which stretches from Haiti to Papua New Guinea, on high-risk, high-yield debt.

His wealth is estimated at about $4.3bn. Since 2001, Digicel has accumulated about $6.5bn of borrowings, mostly to build out networks across 31 regions. More than two years after the company shelved a planned share sale in New York that was in part designed to pay down debt, and with recent earnings disappointing investors, bondholders want a positive catalyst. Digicel faces a $1.3bn debt maturity in 2021, as well as the 2020 payment.

"We expect Digicel to address that with anticipation," said Marie Fischer-Sabatie, an analyst at Moody's Investors Service.

"If the company doesn't make material progress in 2018 and does not start to address the issue by the middle of this year, then we could start to see some pressure on ratings."

Digicel, which declined to comment for this article, faces no immediate pressure, as its next big bond maturity is over two years away and it has pushed out its timetable to reduce borrowings, which amount to about 6.5 times earnings. (Bloomberg)

Irish Independent

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