Durrant Pate/Contributor

Barbadian employees and customers of regional telecommunications giant, Digicel, have been assured there will be no disruption to its business in that territory, following a US$1.7 billion restructuring deal result in a company takeover.

The assurance came on Thursday (July 13) from Digicel’s group communications executive Gabrielle Miller on the heels of news that three American bondholder companies are taking over majority ownership of the company to reduce its debt.

In a statement provided to Barbados TODAY by Miller, it was revealed that Digicel Limited (DL), which owes billions to bondholder firms Contrarian Capital Management, GoldenTree Asset Management and PGIM Fixed Income, signed a restructuring support agreement (RSA) last month with the trio, along with Digicel International Finance Limited’s (DIFL) secured lenders, and Digicel’s founder, Denis O’Brien, who will relinquish his majority stake in the company.

Details of the press statement

According to the statement issued by Miller, O’Brien has endorsed the RSA as a positive outcome for the business. “Mr O’Brien will continue to be involved in Digicel both as an equity holder in the recapitalised business and as one of nine directors of the company’s reconstituted board. Under the terms of the RSA, the company will continue operating its businesses and facilities without disruption to its customers, vendors and employees,” the statement read.

Digicel indicated that once the transactions contemplated under the agreement are finalised, the three US creditor firms will receive approximately 62 per cent of new common equity in the reorganised company. The Digicel Group’s consolidated debt to those creditors will be slashed by about $1.7 billion.

According to the statement, “its annual cash interest expense [will also be] reduced by approximately $120 million, whilst ensuring sufficient cash to fund operations and investment in key growth areas. The telecoms company also said that upon completion of the restructuring agreement, the bondholder companies will have the opportunity to participate in an equity rights offering that will raise up to US$110 million of new capital.

New capital commitment

This new capital commitment will be backstopped in accordance with an agreement by and among the members of the group of US companies and “certain company parties”.

Jamaica-headquartered Digicel said the proposed comprehensive financial restructuring is expected to divide among the investors, 100 per cent of the DL bonds and the DIFL unsecured lower-value bonds as well as refinance and extend the maturity of the company’s other funded indebtedness.

The RSA contemplates that the company will implement the restructuring through an exchange offer for its DIFL lower value notes, Bermuda schemes of arrangement, and United States Chapter 15 recognition proceedings in respect of the consensual financial restructuring.

Chapter 15 governs the provision of relief under US bankruptcy law to non-US companies and individuals in foreign proceedings that seek to protect their US-located assets from enforcement proceedings or direct appropriation by individual creditors.

In conclusion, the statement noted Digicel “expects shortly to launch a proxy solicitation process to, among other things, seek consents to the Bermuda Schemes. Consummation of the Bermuda Schemes is subject to required regulatory and other governmental approvals.”