Digicel bondholders give more time to seal debt deal

Digicel founder Denis O'Brien. Photo: Damien Eagers

John Mulligan

Digicel’s bondholders have extended a grace period by another 15 days, giving more time to thrash out restructuring talks on the telco’s debts.

In a statement on Tuesday, Digicel said it has also received agreement from bondholders to provide a debt issuance of up to $100m (€90.9m) to finance the working capital needs and other general corporate financial requirements of the telecoms company that was founded by Denis O’Brien.

The 15-day grace period can also be extended by another 15 days.

A general agreement – which is not yet finalised – has already been struck with bondholders. It would result in Mr O’Brien, who is Digicel’s chairman, ceding a majority stake in the company to the bondholders in return for the debt deal. Under the agreement, the businessman would remain a Digicel director and one of the biggest shareholders in the group.

“Formalisation of these agreements into a Restructuring Support Agreement (RSA) and implementation of same would recapitalise the business and place it on a firm and sustainable footing for the future,” Digicel said in a statement last month as it secured an earlier time extension.

It added: “The agreements in principle are subject to definitive documentation and other requirements, as applicable, and there can be no assurances that they will be consummated.”

Last year, Digicel completed the sale of its Pacific Ocean arm to Australia’s Telstra in a deal that valued the division at up to $1.85bn.

The sale to Telstra was supported by the Australian government amid tensions with China.

Last November, Digicel warned investors that significant civil unrest in Haiti was having a major detrimental effect on its business in the country.

It reckoned that the financial impact on Digicel Haiti in the six-month period to March this year would be “significant”.

“On a reported basis, assuming recent trends, Digicel estimates adjusted Ebitda in Haiti will be in the region of $25m to $35m, compared to $74m in the prior half year,” it noted.

US-based humanitarian group Mercy Corps warned on Tuesday that Haiti is on the brink of civil war. Vigilantes dragged 13 suspected gang members from police custody last week and beat them to death.