Digicel Group to finalise debt swap after court approval
Published:Thursday | June 18, 2020 | 4:45 PM
Having secured approval from the court in Bermuda of its debt-restructuring scheme, and the sanction of an American court giving recognition to it in the United States, Digicel Group said it expects to finalise the bond swap next week.
The company wanted to eliminate $1.7 billion of its debt, but got acceptances amounting to about US$1.6 billion. The telecoms will see a reduction in its debts to US$5.4 billion. It will also save US$125 million annually on debt servicing costs.
Some of the holdouts to its offer included Jamaican bondholders.
“I suspect the take-up hasn’t been great locally,” said the CEO of a large investment manager firm in Kingston.
One of the bondholders, who is of pensionable age, says she rejected the offer, although she had been told that it would be difficult to trade the bonds.
“I was told that even if I want to sell the bonds, there was no liquidity to sell,” she said.
At least one investor has contacted the Financial Services Commission, which regulates the financial sector, to weigh in on the matter, citing concerns about the process. The refinancing agreement was initially negotiated with large bondholders.
Digicel will exchange existing debt held in the DGL1, DGL2 and DL notes for various new securities. It will secure a portion of the notes by putting up physical assets as collateral. The other notes will be unsecured and therefore accrue a higher interest rate than the secured notes.
Digicel and large bondholders signed a lock-up and support agreement on April 1, representing approximately half of the existing Digicel Group One Limited DGL1 notes and half the Digicel Group Two Limited DGL2 2022 notes, about 15 per cent of Digicel Limited DL2024 notes, and about 30 per cent of Digicel Holdings notes due 2021.
“We are very grateful for the support of our bondholders and other stakeholders in delivering a transformative outcome that underpins our ability to further enhance our services to our 13 million customers across 32 markets,” Chairman Denis O’Brien said in a statement on Thursday.
The new bonds to be issued will mature between 2024 and 2027. Digicel has formed a new holding company, called Digicel Group 0.5 Limited, to execute the bond swaps.