Digicel brokers deal to reduce debt

Digicel brokers deal to reduce debt

BY DURRANT PATE
Observer business writer

Sunday, April 05, 2020

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REGIONAL telecoms giant Digicel has brokered a deal, which — if accepted by all its bondholders — could result in significant reductions in its mounting international debt, which currently stands at US$7 billion.

Digicel has made four tender offerings to exchange existing debts for various new securities, the purpose of which is aimed at “reducing Digicel's leverage, extending its debt maturities, reducing interest costs and improving its liquidity position”.

The deal is part of Digicel's commitment to reduce its debt to more sustainable levels.

If accepted by all bondholders, the tenders would see Digicel's outstanding debt under its bank facilities and bond indentures being cut by some US$1.7 billion from approximately US$7.0 billion to approximately US$5.3 billion (excluding lease liabilities).

In addition, the deal would see Digicel reducing its annual cash interest payments by approximately US$130 million and extend its maturities, which will provide increased liquidity and flexibility to access additional liquidity during the next year.

To that end, Digicel has constructively engaged with certain of its debtholders about a potential exchange offer that would reduce its debt, extend maturities and reduce ongoing financing costs.

The transaction structure and consideration presented in the tender offers are a result of constructive negotiations with certain of its debtholders.

In a statement released on Thursday, Digicel reports that the company and its supporting debtholders have signed a Lockup and Support Agreement representing approximately USS$491 million aggregate principal amount outstanding of existing DGL1 notes.

In addition the Lockup and Support Agreement relates to approximately US$475 million aggregate principal amount outstanding of existing DGL2 2022 notes, some US$154 million aggregate principal amount outstanding of existing DGL2 2024 notes and approximately US$391 million aggregate principal amount outstanding of existing 2021 notes.

Eligible bondholders, who validly tender their existing notes on April 14, will be eligible to receive the total tender consideration, which includes the “early tender premium”.

Eligible bondholders, who validly tender their existing notes after the early tender date but on or prior April 28, will not be eligible to receive the applicable early tender premium.

Instead they will be eligible to receive the tender consideration.


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