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Digicel extends refinancing offer as bondholders revolt

Published:Tuesday | September 25, 2018 | 12:00 AM

Digicel Group was huddling with its creditors on Tuesday after they summarily rejected a plan to swap out US$3 billion of the telecom's bond for longer term debt, a proposal that would have given the company a two-year reprieve.

It also extended the deadline for accepting the offer by three weeks, from September 28 to October 19.

Reports out of London also indicate that the large bondholders, representing more than 60 per cent of the debt that is being refinanced, have signed a lock-up agreement to act in tandem on acceptance of the refinancing offer from Digicel, a company founded by Ireland's richest man Denis O'Brien and had its start in Jamaica.

The refinancing offer that has been rejected involved swapping US$2 billion of bonds due for repayment in 2020 for new bonds due in 2022 at the same coupon rate; and extending the maturity of US$1 billion of bonds due in 2022 to 2024 at a more attractive rate.

The lawyer representing a committee of Digicel's large bondholders said Monday that the group was prepared to discuss an alternative offer if Digicel extended the deadlines for acceptance or withdrew its original proposal.

A day later, Digicel said talks continued with a group of bondholders, leading to speculation that the telecom will eventually put a more attractive refinancing offer on the table.

Since its start-up in Jamaica in 2001, O'Brien has expanded Digicel into more than 30 markets internationally, a build-out financed by debt that is now weighing down the operation. Plans by O'Brien to float the company on the New York Stock Exchange faltered after investors rejected the pricing of the shares.

The company has been liquidating assets as a means of generating cash, but its efforts have been judged inadequate by ratings agencies, leading to credit downgrades. At last estimate, Digcel Group's leverage was around 6.5 times its adjusted earnings.