Telecoms entrepreneur Denis O'Brien was in a pretty stoical mood back in 2015 when he pulled the plug on a $2bn (€1.8bn) IPO of Digicel at the 11th hour. "Why would you sell your front garden when you know it's worth a lot of money and why would you sell at a discount?" he said to American news channel CNBC.
O'Brien has now put a value on his "front garden" under the terms of a proposal to bondholders. It looks like it's $200m for 49pc of the business.
The overall proposal would see bondholders write off $1.7bn of debt in return for accepting new bonds.
The proposal also includes $200m of convertible bonds which if not paid back within three years would entitle holders to 49pc equity in a new company near the top of the group. This would own Digicel's main businesses in the Caribbean, Asia-Pacific and Latin America.
O'Brien has played a good game of hardball with bondholders in recent months, ratcheting it up to a game of chicken this week when he availed of a 30-day deferral on interest payments on around $2.9bn of debt.
What better way to show you are serious than holding off the bond coupon payments?
The precise interest rate on those bonds has not been disclosed but based on the blended rate across the group's debt, the payment due at the end of March would have been $251m, or half that ($125m) if paid twice yearly, as is the case with some bonds.
The big question is whether bondholders will go for the new offer or not.
An old adage comes to mind: "Owe the bank €100,000 and it's your problem, owe it €100m and it's their problem."
Digicel owes $6.9bn and bondholders will weigh up the consequences of not accepting the offer very heavily.
The proposal covers different categories of bonds, including $1.3bn due next April, plus others due in 2022.
What is in it for them? O'Brien has put in two sweeteners. The first is a $200m convertible bond which would equate to 49pc ownership of the group if not repaid in three years. And he is proposing to put $25m of cash himself into the group, along with chipping in the building that houses the group's Jamaican HQ, valued at a further $25m.
It isn't exactly a lot. O'Brien would be hugely incentivised to repay the $200m convertible bond to avoid parting with nearly half the equity.
This would be all the more easily achieved if the debt write-off goes ahead, as it would reduce the group's debt by 25pc.
Would bondholders want half a business that couldn't pay back $200m in three years yet carries debts of over $5bn?
The building and $25m in cash look paltry in the context of an owner who has taken close to $1.5bn in dividends out of the business over the years. It doesn't look like a massive vote of confidence from the owner of the business.
The alternative for bondholders is a higher-risk game of poker that defaults could come further down the road, or the group would be forced to shrink in size by selling assets (probably at very cheap prices), or take in more new equity from somebody else. For O'Brien, control of what he has built up is very important.
He pulled the plug on the Digicel IPO, having valued the group at up to $5bn based on a price range of $13 to $16.
We were never told what the appetite for stock was at that price range, but market sources said investors were not happy at the fact O'Brien would hold most 'B' shares in the group - thereby retaining 94pc voting control, even after raising a couple of billion dollars of other people's money from the market.
The extraordinary success of Digicel in 23 different and often very tough markets has defied the odds. But it has been dogged by the accumulated debt on its balance sheet and the need to invest heavily in new infrastructure to move to 4G and take advantage of the growth in mobile data.
Digicel's biggest markets include Jamaica, Haiti and Papua New Guinea. Revenues earned in local currencies go toward servicing debt held in US dollars. The Jamaican dollar is 14pc lower against the US dollar than it was five years ago. The Haitian gourde is 47pc lower. The Papua New Guinea kina is nearly 20pc lower.
Despite these drags on US dollar revenues, the group has invested around $2bn in new infrastructure in the past few years.
What is happening now isn't so much the slow death of Digicel (it still churns out huge revenues of over $2bn per year) but the beginning of the end of O'Brien's complete control of it.
The fact that the proposal to bondholders is emerging so quickly into the 30-day payment deferral suggests time for horse-trading has been built into the choreography of the process.
Bondholders are too smart to accept the first offer they receive and O'Brien knows only too well how to negotiate with them.
But this isn't just a high-stakes game; it's a high-wire act.
The Covid-19 crisis cannot be forgotten in all of this. Ratings agency Fitch has highlighted the possible impact it could have on spending power and the ability of consumers in many of Digicel's markets to pay phone bills.
O'Brien should have sold "his front garden" five years ago. If he had, he could ask some of those who bought it back then to share the financial pain now.
Banks are only at the beginning of the bad news cycle
Don't expect a major rush by small businesses to borrow their way through the Covid-19 crisis.
The Central Bank and the Government were trumpeting how Irish banks could free up capital requirements to lend out a further €13bn in new loans.
Banks will want to pull back as they may face a tsunami of business loan defaults on the loans they have already lent out.
Ratings agency Fitch lowered its outlook for the creditworthiness of AIB and Bank of Ireland to negative amid fears that temporary payment breaks being offered to customers affected by Covid-19 will create bigger problems further down the road.
As recently as January (prior to the Covid-19 crisis in Ireland), debt ratings agency Scope Ratings said Irish banks faced a fresh spike in bad small business loans in the event of a hard Brexit or if the economic cycle fell into recession.
About 11pc of SME loan balances within the three major Irish banks were non-performing in 2018.
A hard Brexit looks like a tiny sniffle compared with what is coming, with payment breaks, credit forbearance and defaults from small businesses in the months ahead.
SME lending to the hotels and restaurants sector alone stood at €2.4bn. Loans to wholesale, retail, trade and repairs SMEs are another €3.5bn.
AIB shares are down 78pc in the last year. Bank of Ireland is down 70pc in the same time frame. This time round, the market doesn't lie and there may be worse to come.
Sunday Indo Business