Digicel reaches deal with some bondholders to extend debt maturity
Irish telco Digicel has secured investor support for the extension of one of two looming debt payments for two years.
Company chairman Denis O'Brien has been in talks for months to restructure US$6.7bn in debt and had to extend the deadline five times since August 31 to reach an agreement with bondholders.
Digicel managed to push back payment of a US$2bn bond due in 2020 to 2022.
Some 94.7% of bondholders were won over by the acceptance deadline of December 18, after the company sweetened the terms of an offer, which included making US$580mn of the new structure better-ranked senior bonds.
The new terms assure a share in future asset sales to pay off debt and inserts stronger terms, including delaying shareholder dividends until after the new bonds mature, as well as restrictions on new borrowing from Digicel, the Irish Independent reported.
For the small number of bondholders that did not accept the deal, the deadline has been extended, but the terms will worsen if they choose not to accept the new structure.
The deadline for investors to accept the terms for postponing a further bond for US$1bn due in 2022 for two years, under the same terms, is due on Friday, December 21.
Pushing back bond maturities provides financial breathing space and allows the company more time to grow revenues before it needs to repay the debt.
After a cancelled IPO in 2015, which would have reduced its debt, Digicel was been hit by the strengthening US dollar. The company borrows on the markets in US currency but makes its money in a mix of local currencies in the 32 markets where it trades.
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