Durrant Pate/Contributor

Jamaica-based regional telecoms group, Digicel, has reportedly paid more than US$10 million (€9.3 million) in rental charges in the year up to March 2023 to use a jet owned by a company controlled by Irish businessman and Digicel founder, Denis O’Brien.

The Sunday Independent writes that the charges were among US$41.3 million (€38.3 million) of related party transactions outlined in documents relating to the “restructuring support agreement” that will see O’Brien lose most of his stake in the telecoms group in exchange for a US$1.7 billion (€1.6 billion) debt write-off.

The deal would see Digicel’s annual cash interest expense cut by around US$120 million. Interestingly, at the same time, Digicel is reporting a loss before tax of US$185.9 million.

AC Executive Aviation Services, which runs an aeroplane owned by a company controlled by O’Brien and provides Digicel with use, made rental charges worth over US$10.3 million in the 2023 financial year. Other related party transactions included the services of O’Brien’s Island Capital Management Services Limited to assist Digicel in raising debt, debt restructuring and other financings.

Payments made to other O’Brien companies

Digicel reportedly paid a completion fee of US$7 million to Island Capital concerning Digicel’s disposal of its Pacific business and a US$1.29 million retainer fee. The fee was up from US$300,000 in previous years, reflecting the additional services Island Capital provided for the debt restructuring.

O’Brien also holds shares in Actavo, which has provided maintenance services to Digicel. Actavo secured this business through a competitive tender process involving other vendors.

It is being reported that related transactions on construction and maintenance grew, hitting nearly US$18.4 million last year, up from US$11.7 million, mainly relating to maintenance and network expansion in Trinidad, Jamaica, Barbados and the British Virgin Islands.

The documents include financial information for two Digicel entities, Digicel Limited and Digicel International Finance Limited. Holders of bonds in these companies will take approximately 62pc of the new common equity and the opportunity to participate in an equity rights offering that will raise up to US$110 million.

New Digicel board structure

Included in the documents are details of O’Brien’s future involvement with Digicel post-deal and its transactions with other companies linked to him. The documents reference a “DOB (Denis O’Brien) Stepdown Date”, which could see him vacate his position on the Digicel board in the future, subject to various conditions.

The documents said the board would be composed of nine directors, including O’Brien as a non-executive director, subject to the terms of a “services agreement”. He will serve in that role for a period of three years following the implementation of the restructuring agreement.

After three years, O’Brien would have the right to designate one member of the board, either himself or another individual, provided he continued to own 5pc of Digicel common shares. The “services agreement” would see O’Brien perform services for Digicel “in a manner consistent” with his current role as executive chairman of Digicel’s board of directors and other current and past practices with the group.

The document confirms O’Brien would receive 10pc of Digicel shares immediately after the scheme is completed, with warrants to purchase 10pc for a period of six years post-deal close. He will also receive a portion of the proceeds of Telstra’s acquisition of Digicel Pacific, which valued the business at up to US$1.85 billion.