Digicel, the telecoms company owned by billionaire Denis O'Brien, is betting that an expected surge in data revenue at the group will be enough to persuade bondholders they should ride out its current difficulties in the hope of an improved performance in coming years.
The group - subject to intense speculation in recent months about its $6.8bn (€5.8bn) debt pile and how it would be addressed -embarked yesterday on a $3bn (€2.58bn) bond swap, aiming to give it more breathing room to show it can deliver a revenue boost as customers migrate to fast data and smartphones across its markets.
The group operates in 31 markets in the Caribbean, Central America and Asia Pacific.
Although Digicel's bonds have been trading deeply below par value, the company's subsidiaries are offering to swap those existing bonds at 95pc of their face value, with an early tender premium bringing the total to 100pc.
The decision to offer the bond swap effectively at par value is likely to have caught some investors off guard.
More-complicated solutions, and even a big haircut on the existing bonds, were speculated to be among the likely outcomes.
In a process being managed by Citi, Digicel has offered to exchange $2bn (€1.72bn) of outstanding bonds that fall due in 2020 and which carry an 8.25pc interest rate, with up to $2bn (€1.72bn) of new bonds that will also carry an 8.25pc interest rate, but which will mature in 2022.
Additionally, it is offering to exchange all of the aggregate $1bn in bonds that mature in 2022, which carry a 7.125pc interest rate, with $1bn of newly-issued 8.25pc senior cash pay/payment-in-kind (PIK) notes that mature in 2024.
Cash interest on the new 2024 notes will accrue at a rate of 7.125pc, and PIK interest on the new 2024 notes will accrue at a rate of 1.125pc.
PIK interest is not paid in cash, but in additional notes instead.
There is some crossover between bondholders, with some owning bonds of both the 2020 and 2022 classes.
Digicel told investors in recent days that only 4pc of its customer base is using its 4G network, despite the company having invested heavily in its deployment.
In markets where it does have a 4G network, only 56pc of customers are using smartphones and only one-third of those are 4G-enabled.
Digicel has conceded to investors that it over-priced data packages and has had to revamp offers to customers to help it gain traction.
That process appears to be paying off already in markets such as Panama. There, 4G usage on the Digicel network has jumped from about 4pc to more than 10pc.
The telecoms group told investors this week that revenue fell 6pc in the quarter ended in June. Its earnings before interest, tax, depreciation and amortisation dipped 2pc to $249m (€214m).
Early last year, Digicel embarked on a major transformation programme, announcing a plan to slash its workforce by a quarter, and to upgrade its networks.
The deadline for the bond swap is September 28.