Bondholders in Denis O’Brien’s Digicel, who are on track to take control of the over-indebted business as part of a massive restructuring, have agreed to grant the group a bridging loan of up to $100 million (€90 million) as work continues on the wider overhaul.
Digicel said on Tuesday that holders of $925 million of bonds that were due to be repaid on March 1st — the group did not have enough money to redeem the notes — have agreed to give the company up to a further 30 days’ grace on the overdue debt, which would avert a technical default at a time when details on the restructuring path are still being finalised.
The holders of these bonds have also permitted Digicel to take on up to $100 million of further borrowings by way of a bridge facility, to provide the company with funds for working capital and “other general corporate purposes”, it said.
Transformation programme
Sources said in March that Digicel plans to invest about $50 million in a transformation programme to boost revenues and improve efficiency in an effort to reboot earnings.
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Digicel also said that various classes of bondholders had agreed by overwhelming majorities to grant certain waivers that would allow it proceed with a possible avenue to copperfasten the restructuring without triggering a default event. The restructuring route that Digicel may take is a so-called scheme of arrangement, which is a court-approved arrangement between a company and creditors.
Majorities of between 78 per cent and 91 per cent of the relevant bond categories have given consent, according to the company.
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The broad outline of the restructuring being finalised was agreed with major groups of creditors at the end of February.
It will mean holders of the bonds that were due last month and a category of subordinated bondholders swap their $1.8 billion debt investment for an initial 90 per cent equity stake in the business.
Junk bond sales
Mr O’Brien’s stake will fall to 10 per cent as a result, though he may see his holding increase again to as much as 20 per cent, should warrants attached as an incentive to the restructuring end up being exercised.
The overhaul will also involve two other categories of bondholders writing off most of their combined $640 million investment.
Founded by Mr O’Brien in 2001, Digicel has spent €5 billion over more than two decades building out mobile and other telecoms networks across as many as 33 markets, funded mainly by junk bond sales. Mr O’Brien also extracted at least $1.9 billion of dividends from the group between 2007 and 2015.
