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Digicel creditors agree to debt for equity swap

Denis O'Brien, founder and chairman of the Digicel Group (File photograph)

A group of creditors of the embattled telecommunications provider Digicel has agreed in principle to cancel up to $1.8 billion in debt in return for equity in the Bermuda-registered business.

Should the proposed transaction go through, Digicel said, it would reduce the group’s consolidated debt by approximately $1.8 billion and reduce its annual cash interest by approximately $110 million while ensuring sufficient cash to fund operations and invest in key growth areas.

Digicel, which operates in 25 territories including Bermuda, said in a statement there are discussions to negotiate definitive documentation.

The proposed debt-for-equity swap was agreed in principle as today’s deadline for the company to pay out $925 million to bondholders loomed.

If the deal completes, news reports said the 64-year-old Irish billionaire Denis O’Brien will lose control of the company he founded in 2001.

Digicel said Mr O’Brien has endorsed the proposed transaction as a positive outcome for the business.

It said he would remain actively involved in the business as a director and retain an equity interest in the recapitalised business.

In a statement, Digicel said: “Since shortly after the completion of the sale of Digicel Pacific in July 2022, the company has been actively engaged with its key creditors. While parties initially sought solely to extend the maturity of the Digicel Limited 6.750 per cent Senior Notes due March 1, 2023, the deteriorating and unprecedented situation in Haiti since September 2022 led the company to shift its focus to a more holistic solution for the company’s capital structure.

“Accordingly, discussions have since focused on a comprehensive transaction. The company and an ad-hoc group of crossover holders (the “AHG”), holding approximately 50 per cent of the company debt, have subsequently reached an agreement in principle on the key terms of the proposed transaction that comprehensively addresses the company’s debt and ensures business continuity and uninterrupted service to customers.”

Digicel said the AHG are material debt holders of the company, owning approximately 78 per cent of the Digicel Limited Notes and approximately 58 per cent of Digicel International Finance Limited’s Subordinated Notes due 2026, approximately 64 per cent of the DIFL Unsecured Notes due 2025, approximately 39 per cent of the DIFL Secured Notes due 2024 and approximately 35 per cent of the DIFL Term Loans due 2024, and approximately 41 per cent in aggregate of Digicel Group Holdings Limited’s Senior Unsecured notes due 2025 and DGHL’s Perpetual Convertible Notes.

The statement said: “The proposed transaction is subject to definitive documentation and other requirements, as applicable, and there can be no assurances that it will be consummated.”

It added: “The company continues to engage in productive negotiations with holders regarding the proposed transaction, including, among others, with additional holders of the DIFL secured indebtedness.

“While no definitive agreement concerning the material terms of the proposed transaction has been reached and no assurances can be provided that an agreement will be reached, based on momentum to date and agreement in principle on key terms, the company believes a consensual and comprehensive restructuring is achievable.”

Digicel also announced the successful completion of its consent solicitation in respect of extending the maturity of the Digicel Limited Notes.

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Published March 02, 2023 at 7:58 am (Updated March 02, 2023 at 3:16 pm)

Digicel creditors agree to debt for equity swap

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