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Fidelity steams in to snap up €1.2bn Digicel bond

FIDELITY, Capital Research and Ashmore (UK) are understood to have been major buyers of the mega €1.2bn bond recently issued by Denis O'Brien's Digicel. It was the biggest raid mounted on capital markets by an Irish-led company since the economic crisis began.

Digicel bankers had sold the initial allotment of €540m in less than three hours, with 130 investors kicking tyres before signing cheques.

Another €660m was promptly put up for grabs.

Bond issue documents circulated last week show the sheer scale of O'Brien's Digicel which has 13 million subscribers in 30 territories, from Jamaica and Haiti in the Caribbean to Papua New Guinea and Vanuatu in the South Pacific. Two years ago, the mobile phone operator had 7.5 million subscribers.

Last year, Digicel group had revenues of €1.97bn, with operating profit of €495m. Growth is continuing with Q1 revenues this year up 11 per cent over the year.

O'Brien has geared up Digicel to fuel its growth momentum. At the end of 2012 total debt at the firm was a hefty €3.8bn. Digicel's net debt is around four times its EBITDA, which is fairly toppy.

O'Brien is a 29.9 per cent shareholder in INM, which is trying to reduce its borrowings to under three times earnings.

The new €1.2bn bond issue will be used to refinance existing debt at better rates.

The billionaire has also taken money off the table, with a €230m "special dividend" paid to shareholders last year and another quarterly €7.75m dividend paid. O'Brien owns 94 per cent of Digicel Group Ltd.

The bond documents show another O'Brien's firm, Island Capital, earns 0.5 per cent of any sum raised on the markets, equating to €5.8m in the latest fundraiser. O'Brien firms including Communicorp, Ican and AC Executive Aviation shared €34.4m in fees over a three-year period.

Sunday Indo Business