Wednesday 16 October 2019

Digicel tipped to eye Australia for potential equity deal

Undervalued: Denis O’Brien pulled Digicel’s IPO in 2015. Photo: Simon Dawson/Bloomberg
Undervalued: Denis O’Brien pulled Digicel’s IPO in 2015. Photo: Simon Dawson/Bloomberg
Donal O'Donovan

Donal O'Donovan

Irish-owned Digicel is reported to have sounded out Australian investment funds about a potential listing on the Australian Securities Exchange.

The Australian Financial Review reported that a select group of funds in the country were asked to look at Digicel, as its owner explored strategic options including a potential listing.

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It is not clear if any mooted equity deal in Australia would involve a stake in some or all of Digicel, whose far-flung operations include a growing business in Papua New Guinea that is now understood to be an increasingly significant element of the overall group, and interests in Fiji and Samoa, all relatively close to Australia; as well as in the Caribbean. A spokesman for Digicel declined to comment on the report.

It is understood that bondholders were told last week that all options in terms of the capital markets - including potential bond or equity deals - remain on the table for the group, which is struggling to grow out from under its $6.7bn (€5.9bn) debt pile.

Denis O'Brien sensationally pulled a planned initial public offering of Digicel shares at the 11th hour in October 2015, rather than push ahead with a deal he believed undervalued the telecoms group.

In Australia, reports suggest any new equity deal is a long way off, at least for the foreseeable future.

Any equity raising could help reduce Digicel's closely watched debt ratio.

Figures released to Digicel bondholders last week showed its debt ratio is tipped to peak at more than seven times earnings before interest, taxes, depreciation and amortisation (ebitda) this year, after a sharp drop in earnings.

The closely scrutinised debt metric is expected to slip back to end the firm's current 2020 financial year at seven times earnings, although asset sales, equity raising or bond buy-backs could potentially reduce those levels.

Figures released to Digicel bondholders showed a 9pc decline in underlying earnings to $230m (€202m) in the three months to March 31.

Underlying revenues were up 1pc to $595m (€526m) for the three months to the end of March, though reported revenue fell 3pc, partly on currency effects.

Irish Independent

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