Digicel cuts US$1.7bn in debt under restructuring process

Caribbean-focused telecoms group Digicel reached an agreement with bondholders to cut debt by US$1.7bn and complete a restructuring plan with a new chairman and a new holding company.

Digicel serves around 10mn individuals and business customers in 25 markets in the Caribbean and Central America, and has 5,000 employees.

“The completion of the restructuring marks an important milestone for the group, which now has a substantially strengthened capital structure, positioning the group for long-term success,” the company said in a statement to the market.

Under the restructuring, Digicel extended debt issued by Digicel International Finance Limited (DIFL) and Digicel Intermediate Holdings Limited (DIHL). Meanwhile, notes issued by Digicel Limited (DL) and subordinated notes issued by DIFL were equitized, it said.

The debt-conversion transaction reduces Digicel’s debt load to around US$3bn from US$4.7bn.

Last year, Fitch Ratings downgraded the long-term issuer default rating of DIFL to 'RD' from 'C’ as several notes were due to expire without a creditors’ deal.

The agency is now expected to reassess the company’s IDR with the completion of the debt restructuring process, potentially upgrading the notes.

In addition to the US$1.7bn consolidated debt haircut, Digicel said its annual cash interest expense would be reduced by approximately US$120mn.

The company started in Jamaica in 2001, later expanding to other markets in the region, and says it has invested US$5bn in its operations.

NEW BOARD

As part of the restructuring, the company’s board of directors has been reconstituted as a nine-member team, with Rajeev Suri as chairman replacing Digicel's founder Denis O'Brien.

O'Brien steps down as executive chairman but will remain an equity holder and director, Digicel said. 

Suri was for more than six years CEO of Nokia before being replaced by Pekka Lundmark in March 2020. Suri’s latest position was CEO of global satellite group Inmarsat. 

“It's good news today for our customers, our communities and all our staff with Digicel on a more solid financial footing enabling it to maintain and increase its longstanding commitments to the region,” said interim CEO Maarten Boute.

The new company has PGIM, GoldenTree Asset Management and Contrarian Capital Management, as well as their associates and investing vehicles, as major investors and credit holders.