DIGICEL RE­QUEST FOR BOND RE­PAY­MENT DE­LAY RE­JECTED

In­vestors dis­miss Ir­ish ty­coon’s pro­posal to ex­tend debt as wor­ries rise over de­fault

The Star (St. Lucia) - Business Week - - DIGICEL GROUP LTD - BY ARTHUR BEESLEY, FT COR­RE­SPON­DENT IN DUBLIN

Apush by Ire­land’s rich­est man to re­fi­nance his heav­ily in­debted Caribbean tele­coms com­pany has hit a wall af­ter big in­vestors re­jected his bid to post­pone re­pay­ing $3bn in bonds.

De­nis O’Brien’s ef­fort to buy more time for Digicel to re­pay the debt comes at a crit­i­cal time for the com­pany, amid anx­i­ety about a pos­si­ble de­fault on a $2bn bond due in 2020.

Now bond­hold­ers have dis­missed Mr O’Brien’s pro­posal to ex­tend by two years this debt and a $1bn 2022 note, say­ing the terms he has of­fered were “un­ac­cept­able”.

A state­ment from a bond­holder com­mit­tee sug­gests it will take a ro­bust ap­proach to talks with Mr O’Brien, who took Digicel into 31 mar­kets af­ter found­ing the com­pany in Ja­maica in 2001.

Digicel’s bond­hold­ers are known to in­clude Ash­more, Black­Rock and Ea­ton Vance but their pre­cise stance is un­known and it is not clear whether they are rep­re­sented on the com­mit­tee.

Mr O’Brien faces the prospect of hav­ing to sweeten the terms of a re­struc­tur­ing pro­posal that has led to down­grades from rat­ing agen­cies Moody’s and Fitch.

The com­pany has been a lu­cra­tive in­vest­ment for Mr O’Brien but its bonds

Digicel’s bond­hold­ers are known to in­clude Ash­more, Black­Rock and Ea­ton Vance but their pre­cise stance is un­known and it is not clear whether they are rep­re­sented on the com­mit­tee

have been trad­ing at 60 cents and 70 cents on the dol­lar, as con­cern mounts about its in­debt­ed­ness at a time of anx­i­ety over risks to emerg­ing mar­kets more gen­er­ally.

Rev­enues and earn­ings have de­clined and Digicel has cut tar­iffs for data to boost the slow up­take of ser­vices in­tro­duced af­ter a $2.4bn in­vest­ment in net­works.

Law firm Akin Gump, which is ad­vis­ing the bond­holder com­mit­tee, said in­vestors hold­ing more than 60 per cent of each bond have “en­tered into a lock-up agree­ment” in which they re­solved not to ten­der their notes in re­sponse to Mr O’Brien’s pro­posal to pro­long the debt.

In re­sponse, Digicel said that it was ex­tend­ing by three weeks the early ten­der dead­line for the of­fer un­til Oc­to­ber 19.

This move, days be­fore the Fri­day dead­line for ac­cep­tance of the of­fer, was the sec­ond ex­ten­sion. “Digicel con­tin­ues con­struc­tive dis­cus­sions with an ad hoc group of note­hold­ers re­gard­ing the ex­change of­fers,” the com­pany said. With­out nam­ing any Digicel in­vestors, Akin Gump said it has held two tele­con­fer­ences for mul­ti­ple fi­nan­cial in­sti­tu­tions who to­gether hold $2.8bn of bonds is­sued by the com­pany.

“Based on the strong feed­back re­ceived from Digicel Group Ltd note­hold­ers, Akin Gump has in­formed Digicel Group Ltd and its ad­vis­ers that the cur­rent terms of the pro­posal set out in the of­fer­ing mem­o­ran­dum are un­ac­cept­able to . . . note­hold­ers,” it said.

The com­mit­tee has di­rected Akin Gump to com­mu­ni­cate a re­quest to other bond­hold­ers to refuse to ten­der their notes “and thereby fur­ther in­crease the al­ready size­able ma­jor­ity of

Digicel Group Ltd note­hold­ers” who op­pose it.

Big in­vestors have re­jected De­nis O’Brien’s at­tempt to post­pone re­pay­ing $3bn in bonds

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