Digicel is a step closer to securing an agreement with bondholders that would lop $1.6 billion off its debt burden.The telecommunications firm said yesterday that the deal will reduce its annual interest payments by $125 million and cut its total debt to $5.4 billion.The maturities of some debt securities will also be extended, giving Digicel greater financial flexibility.Digicel said its Digicel Group One Ltd scheme of arrangement was effective. DGL1 Ltd is a Bermudian-based entity used to facilitate the debt restructuring.And the debt reduction process is expected to be complete next week after consummation of previously announced offers to exchange existing debt of Digicel Group Two Ltd for various new securities. Digicel has been engaging with bondholders for the past 2½ months to strike a deal a reduce a $7 billion debt burden that the company considered “unsustainable”.The Bermuda Supreme Court approved the scheme of arrangement on June 8 and it was also sanctioned by a US bankruptcy court on Wednesday.Digicel said the agreements left the company, which offers services across the Caribbean as well as in Bermuda, “well positioned for future growth”.Denis O’Brien, the Irish billionaire who owns the company, said: “We are very grateful for the support of our bondholders and other stakeholders in delivering a transformative outcome that underpins our ability to further enhance our services to our 13 million customers across 32 markets.“To date, Digicel has invested over $7 billion providing state-of-the-art infrastructure in 32 markets, including over $2.2 billion of this over the past five years. “Our journey and investment encompassed a wide range of emerging markets some of which had little or no telecommunications infrastructure prior to Digicel commencing operations. “In other markets we drove competition and services to challenge dominant incumbents, reducing prices and delivering fast-track, high-speed services. Our next phase will be as a digital lifestyle partner across all our markets.”Jean Yves Charlier, chief executive of Digicel Group, said the pandemic was impacting the company’s income.“In light of the severe impact that Covid-19 has had on the global economy and in many of our markets, we anticipate a continuing impact on our revenue, at least through the remainder of calendar year 2020,” Mr Charlier said. “We have implemented significant measures to help us mitigate a portion of the revenue impact through new cost savings initiatives and I would like to acknowledge our staff for agreeing to accept pay reductions during this period and similarly our board, for agreeing to suspend a proportion of their remuneration and fees for the year.He added: “Covid-19’s impact has been both positive and negative in the first fiscal quarter of FY21. We have seen increased demand for connectivity and content services. However there has been pressure on mobile prepaid, roaming and in-store sales in the consumer segment, and the tourism sector, SMEs [small and medium-sized enterprises] and governments in our Business Solutions segment. “Year-over-year, on a reported basis, we expect service revenues to be down by a high single-digit percentage in the first quarter of fiscal year 2021.” Mr Charlier added that Digicel’s Caribbean markets, including Jamaica and Trinidad, had been most impacted by Covid-19 while Haiti and the Pacific markets, including Papua New Guinea had been the most resilient.”Law firm Conyers advised Digicel on Bermuda aspects of the tender offers as well as being main counsel for the scheme of arrangements under section 99 of the Companies Act 1981. Conyers said in a statement: “Digicel’s use of a Bermuda process rather than Chapter 11 under the US Bankruptcy Code avoided the need for debtor in possession financing at a time when credit markets were disrupted, as well as avoiding litigation under the ‘absolute priority’ rule under the US Bankruptcy Code.” Conyers’ team leads were Christian Luthi and Edward Rance. Other team members included Marcello Ausenda, Robert Alexander, Rhys Williams, Andrew Barnes and Jacari Brimmer-Landy.