Business Irish

Tuesday 16 January 2018

Digicel to raise $925m through private placement bond sale

Digicel, which is owned by businessman Denis O’Brien, said yesterday that it plans to raise $925m by selling bonds in a private placement (REUTERS/Andres Martinez Casares)
Digicel, which is owned by businessman Denis O’Brien, said yesterday that it plans to raise $925m by selling bonds in a private placement (REUTERS/Andres Martinez Casares)

Digicel said that it plans to raise $925m by selling bonds in a private placement.

The money will be used to repay borrowing of $800m due in 2017 and for general corporate purposes, Digicel said in a statement.

Digicel, which is owned by businessman Denis O’Brien, said the new bonds will yield 6.75pc and are due to be repaid in 2023. The bonds to be replaced yielded 8.25pc and were due in 2017.

Companies and countries all over the world are using cheap credit from central banks which are keeping interest rates at record low levels to repay expensive loans.

Digicel is offering cash to repay all of its outstanding 8.25pc bonds by Monday. Bondholders will be eligible to receive $1,026.5 for each $1,000 bond, plus any accrued and unpaid interest up to the settlement date. 

Rating agency Fitch said that it would rate the new bonds as RR4(EXP).

“Digicel’s ratings reflect its solid performance and cash flow from operations generation, geographic diversification with a leading market position, strong brand recognition, as well as Fitch’s expectation for stable credit metrics over the medium term,” Fitch said. But the agency also said Digicel has high borrowings and exposure to countries with low credit ratings.

The 13-year-old company operates in 33 countries which are mainly in Caribbean, Central America and Asia Pacific.

Fitch added that Digicel has generated “stable operating results” in the first nine months of the company’s financial year which ends in March, and Fitch expects this trend to continue over the medium term.

Sales in constant currency posted “stable growth of 5pc with a solid EBITDA margin of 43pc during the period,” it added.

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