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Digicel to raise US$250m from bond placement

Published:Wednesday | February 8, 2012 | 12:00 AM
Founder and chairman of Digicel, Denis O'Brien. The company is said to be US$4.9b in debt.File

Digicel Limited plans to raise US$250 million (J$21b) from a private placement of an eight-year bond.

The proceeds will fund potential acquisitions, future capital expenditure and debt servicing.

Digicel did not say when the placement of the senior notes due to mature in 2020 would happen.

The bond will price at a yield of 7.0 per cent to 7.25 per cent, Dow Jones Newswire reported late Tuesday.

Citigroup Inc, JPMorgan, Credit Suisse, Deutsche Bank and Barclays Capital are managing the issue.

Moody's Investors Service Inc. assigned the bond a B1 rating.

Fitch has assigned a 'B/RR4(exp)' rating to the bond. The rating incorporates Digicel's solid operating performance, increasingly diversified revenue and cash flow generation, and is supported by its strong brand recognition and position in the wireless market.

The rating is tempered by continued high leverage.

Fitch said it expects Digicel to grow even stronger in its home market of Jamaica following the deal with America Movil to acquire Claro Jamaica's operations "which is the most important country in terms of EBITDA generation of the company, despite losing some cash flow diversification".

The Honduras leg of the tri-country deal has been finalised, but the El Salvador transaction is still going through the aproval process.

"The economics of the overall transaction still remains at US$355 million, which Fitch estimates that the biggest part of this will be received by Digicel after the sale of the operation in El Salvador is finalised," the rating agency said.

Digicel's overall debt is estimated at US$4.9 billion, or close to five times EBITDA - split US$2.19b to Digicel Group, US$1.56b Digicel Limited, US$919m to Digicel International Finance Limited, and US$247 million to DPL.

Digicel has at least US$1.91 billion of debt maturing between April 2014 and January 2015, but faces no significant maturity risk before that period, Fitch said.