Digicel raises US$1.2b for debt refinancing
Citi, a global financial institution, described the US$1.25 billion refinancing of Digicel's debt as the largest in its class from emerging markets.
The telecoms initially meant to raise new debt of US$935 million, but upsized the offer by US$250 million on Monday. Digicel wants to reduce its debt, for which the majority of the fundraising is earmarked, but it also said some funds would be used for corporate and capital expenditure purposes. It plans early redemption of 2018, 2019 and 2020 bonds from the proceeds.
"The transaction is consistent with the group's strategy of proactively managing our debt maturity profile on improved terms, where practicable. We have successfully replaced 7.0 per cent debt with lower coupon debt, while pushing out our next material debt maturity to September 2020," said Digicel Group CEO Colm Delves in a company statement.
Both the 'Term Loan A' and 'Term Loan B' were significantly oversubscribed, stated a release on the placements.
"The market's very positive response to Digicel's landmark transaction is extremely encouraging and supportive of the group's ongoing transformation programme, Digicel 2030. This financing represents the largest Term Loan B transaction issued in the emerging markets, and Citi is proud to be part of it," stated Blake Haider, managing director for Latin credit markets at Citi.
The new loans are on improved terms with maturities of between five and seven years. In addition, Digicel said in a statement it will have access to a US$100 million revolving credit facility.
The loans will be used to repay existing debt of US$916 million. It would also redeem US$250 million of Digicel Limited 7 per cent senior notes due 2020. The new loans have an interest of Libor plus 375 basis points.
"We are very pleased with the level of support we received from a high-quality group of lenders and investors in this upsized term loan issue," said Delves.
"The group remains focused on deleveraging over the near and medium term," he said.
Rating agency Moody's said Digicel's debt maturities would reach US$2.25 billion in 2020 - split US$2 billion at Digicel Group and US$250 million at Digicel Limited - but then dip to US$1 billion towards 2023. Moody's estimates Digicel's debt leverage at 6.5 times earnings.