Business
JM | Nov 23, 2020

Digicel looks to buyback bonds that would give holders stake in telecoms group

Al Edwards

Al Edwards / Our Today

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Digicel’s downtown Kingston headquarters in Jamaica. (Photo: Cableplan.com)

Digicel is looking to purchase some of the bonds issued earlier this year that would see those convertible noteholders have a claim on the telecoms group in 2023.

This latest move would see Digicel shave around US$50 million of its US$5.5 billion debt. It is likely there will be a full take up of the offer at 20 cents on the dollar. Some analysts have raised eyebrows at the low price but it is higher than the current Digicel bond trading price.

Digicel has won itself some breathing room by structuring an arrangement which sees its huge debt mountain of US$7 billion come down to US$5.4 billion. It also managed to win US$200 million from the French telecoms giant Orange for what was held to be unfair competitive moves in the French Caribbean where Digicel enjoys a presence.

Furthermore, Digicel’s decision to go all-in as a digital player is showing promise but that is a long term move as it looks to pivot from an over-reliance on revenues from voice.

The general idea with this tender offer is not to allow those bonds to convert into shares by raiders looking to get a foothold in the company founded and built by Denis O’Brien.

Headquartered in downtown Kingston, Jamaica, Digicel was founded in 2001 and has a footprint in 32 markets spread across the Caribbean, Central America and the Pacific.

For the financial year ended in March 2020, Digicel reported a revenue figure of $2.3 billion generating an operating profit of US$249 million.

Digicel has refinanced four bonds this year.

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