South Africa’s Blue Label Telecoms Ltd introduced Thursday that it had concluded an settlement to restructure and refinance cell operator Cell C’s 7.3 billion rand ($411 million) debt to bolster its funds and liquidity.
The settlement with Cell C’s shareholders and lenders is a last and important step within the cell operator’s turnaround plan which included deleveraging its steadiness sheet and offering liquidity to function.
Shares in Blue Label, which purchased a forty five% stake in Cell in 2017, have been up 5.6% to six.60 rand by 0744 GMT on the announcement.
Blue Label has been attempting to dig Cell C out of debt because it bought the stake. It stated in a press release that the Cell C recapitalisation will improve the worth of its funding and restore shareholder worth.
As a part of the settlement, The Pay as you go Firm (TPC), a subsidiary of Blue Label, will lend Cell C 1.03 billion rand to settle the claims of secured lenders by paying an quantity of 20 cents for each 1 rand of debt, as per the accepted compromise provide, Blue Label stated.
Secured lenders who’ve elected to stay invested in Cell C will lend the service an quantity equal to the compromise provide below a brand new mortgage association, it added.
“This new mortgage association shall be curiosity bearing, secured and provides an mixture capital face worth equal to 2.75 occasions of the quantity superior,” Blue Label stated.
Moreover, all collaborating lenders within the new mortgage shall be issued shares in Cell C. The service may also situation shares to Blue Label by way of a rights situation, growing its stake to 49.53%.
To additional assist Cell C with its working capital necessities, TPC shall buy Cell C’s pre-paid airtime for a complete of 1.5 billion rand. Different agreements embody TPC elevating 1.6 billion rand of the required funds from monetary establishments, the assertion stated.
“Day one submit recap, Cell C may have achieved a big discount within the debt of the enterprise to allow us to maneuver ahead and make the enterprise extra streamlined,” Cell C Chief Govt Officer Douglas Craigie Stevenson stated.