JAM | Jun 2, 2023

Digicel bondholders agree to further markdown debt

/ Our Today

Reading Time: 2 minutes
Aerial view of Digicel’s regional headquarters along the Kingston waterfront in Jamaica. (Photo: Peter Cook/View for de Blacam and Meagher architects)

Durrant Pate/Contributor

Bondholders in Digicel’s holding company have reportedly agreed to mark down part of their debt but the threat of Chapter 15 bankruptcy protection looms, as the group continues talks on a wider restructuring.

It has been disclosed that bond holders of US$438 million in Digicel Group Holdings Ltd (DGHL) have agreed to accept an initial US$163.5 million in cash. However, the group will retain rights over “certain future distributions from the proceeds of the sale of other remaining assets of DGHL”.

The shareholder group has accepted an initial US$19.5 million cash payment for US$215 million of so-called senior payment-in-kind (PIK) notes but also continues to hold rights to potential certain future distributions from DGHL asset sales. For slashing its debt, the bondholders want equity and control of Denis O’Brien’s company, which is the subject of continuous negotiations.

Earlier this week, the Jamaica-based regional telecoms giant proposed amendment providing for an additional 15-day extension with an option for a further 15-day extension with the consent of the holders of the majority of the outstanding aggregate principal of the notes to the 90-day grace period previously consented to.

In the meantime, Digicel Limited continues to engage in negotiations for a comprehensive restructuring transaction, which would reduce the company’s funded indebtedness by approximately US$1.8 billion.

“While no definitive agreement concerning the material terms of such a transaction has been finalised, and no assurances can be provided that it will be finalised, based on negotiations to date and agreement in principle on key terms, the company believes a consensual and comprehensive restructuring is achievable in the near term. The company expects to announce further updates in the near term,” Digicel Limited said in a statement.

The Irish Times quoted Digicel as saying, “it is envisaged that the restructuring will be completed through a so-called scheme of arrangement carried out in Bermuda and rubber-stamped through a US reorganisation under Chapter 15 bankruptcy protection. This is similar to how Digicel carried out another debt restructuring in early 2020 when debt investors agreed to write off US$1.6 billion of Digicel’s then US$7 billion debt mountain.”


What To Read Next