O’Brien’s Digicel indicates intention to make good on debt pledge

Denis O’Brien’s Quinta do Lago resort in Portugal had a lucky escape on Wednesday when wildfires swept around the popular holiday destination in the Algarve as much of southern Europe battles with a sweltering heat wave.

The resort, comprising three golf courses, hotels, a sports campus and residential units, was happy to report on Thursday that its facilities had reopened after blazes were brought under control.

Bondholders in O’Brien’s Digicel telecoms group, who have been subject to scorching in recent years as they were cornered into two debt restructurings (including one that imposed $1.6 billion (€1.6 billion) of capital losses), were also relieved on Thursday to see the group’s sale of its Pacific unit to Australia’s Telstra go through.

Exit tax

The closure of the deal for an upfront $1.6 billion (€1.59 billion) was helped as the group agreed to enter into arbitration with Papua New Guinea, the unit’s main market, over a surprise $100 million exit tax with which it was landed with after the transaction was announced.

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Telstra, which received funding from the purchase from the Australian government, said that disputed tax is entirely between PNG and Digicel.

Meanwhile, Digicel, which will remain in 25 markets across the Caribbean and Central America, has moved quickly to make good on a promise to creditors that it would use the sale to pay down debt. Its Jamaica-based head of public relations, Antonia Graham, told the local press in recent days that the group will redeem in the coming weeks some $1.1 billion of bonds that were ordinarily due to mature in 2024.

This will reduce Digicel’s debt from about $5.7 billion to $4.6 billion.

Still, there is no word, as yet, about what Digicel’s plans are for some $925 million of bonds that fall due in March and whose value had taken a battering in recent months, amid concerns about the group’s ability to refinance the debt.