Wednesday 20 March 2019

Digicel bondholders tap US law firm

Dennis O'Brien, chairman and co-founder of Digicel Group Ltd
Dennis O'Brien, chairman and co-founder of Digicel Group Ltd
Donal O'Donovan

Donal O'Donovan

A group of Digicel bondholders has organised to negotiate with the company for better terms on its proposed $3bn (€2.59bn) debt exchange, and is working with US law firm Akin Gump Strauss Hauer & Feld, it is understood.

It is not clear if the law firm is working with owners of single or multiple classes of Digicel bonds. Citi is leading the swap exercise for Digicel. The Denis O'Brien-owned mobile telecoms business has proposed a refinancing to bondholders that includes a new corporate structure in which new debt will be issued from two new holding companies inserted between holding company Digicel Group Ltd and operating company Digicel Ltd, according to a company statement. The scheme will ultimately push back debt maturities on bonds scheduled to fall due in 2020 and 2022.

Digicel's offer is to exchange $2bn of bonds due in 2020 that carry an 8.25pc interest rate, with up to $2bn of new bonds at the same interest rate but maturing in 2022. It is also offering to swap $1bn of bonds that mature in 2022, and pay a 7.125pc interest rate, for $1bn of bonds due in 2024 - with interest of 8.25pc paid in a mix of cash and deferred or so called payment-in-kind (PIK) notes. Bondholders' early tender deadline to accept the swap at the best terms is September 14, with a final acceptance deadline of September 28. Bondholders may look to push back the timetable if they seek revised terms.

Additional reporting Bloomberg

Irish Independent

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