Durrant Pate/Contributor

Jamaica-based regional telecoms giant Digicel has put the brakes on its planned early refinancing of some of its US$2.6 billion debt, bondholders have been told.

The Irish Times is reporting that Digicel made the move amid continued uncertainty over a US Department of Justice case looking into whether the company breached foreign bribery laws, according to sources. This would have marked the first refinancing since the restructuring early last year of the company and would have represented a major milestone for the company.

Last November, Digicel made a voluntary disclosure “relating to possible violations of the US Foreign Corrupt Practices Act”. 

At the time, Digicel said it was “cooperating fully” with American authorities, adding that it was “committed to conducting business in adherence with laws and regulations of the jurisdictions in which we operate, supported by a rigorous ethics and compliance programme”.

Digicel’s disclosure to US authorities is said to relate to activities in Haiti, which has again descended into chaos in recent years as criminal gangs have grown in power and taken ‘almost complete’ control of the capital, Port-au-Prince.

The case has been in limbo since February 10th, when US president Donald Trump paused FCPA enforcement actions for at least 180 days.

Digicel bouncing back 

The company completed a major debt restructuring early last year that saw founder and Irish business mogul Denis O’Brien cede 90 per cent of the business to a group of bondholders.

Following this deal, Digicel’s fortunes improved with sources citing earnings before interest, tax, depreciation and amortisation (EBITA) for the December third quarter growing by an annualised three per cent to US$195 million.

The earnings improvement came even as revenues remained flat at US$460 million, according to the sources, who are familiar with Digicel’s most recent quarterly report circulated to bondholders. The Irish Times further reports that while Digicel continues to have earnings problems in Haiti, which has been plagued in recent years by gang violence, the regional telecoms is feeling increased competition in the French West Indies from Eir owner, Xavier Niel’s Iliad telecoms business. 

In Jamaica, Digicel’s biggest-earning market, the business is said to be doing well.

Digicel struck a deal in 2020 to allow Iliad to use its mobile network across the French West Indies. Other areas of Digicel’s network of 25 markets across the Caribbean and Central America were generally flat on the earnings front during the reporting period.

New management took control

A spokeswoman for Digicel declined to comment on the latest quarterly report and round of bond investor briefings. A consortium of bondholders led by PGIM, Contrarian Capital Management, and GoldenTree Asset Management took control of Digicel in January 2024 as they swapped US$1.7 billion of its borrowings for a 90 per cent stake. 

That marked the group’s third debt restructuring in five years. Digicel’s debt mountain peaked at more than US$7 billion in early 2019. Under the restructuring, Digicel issued US$1.25 billion of senior secured bonds and a term loan of about US$1 billion, both of which fall due in May 2027. 

It also issued about US$419 million of senior unsecured notes. Interest on some of Digicel’s debt has been allowed to accumulate since then, increasing the overall principal. 

The new management team that took charge following the restructuring, including chief executive Marcelo Cataldo and chief financial officer Leopoldo Gutierrez, is keen to refinance the senior unsecured bonds and term facility well in advance of the maturity, according to sources.