Digicel completes consent solicitation on 2023 notes
DIGICEL Limited (DL) received the requisite consents from its noteholders to amend the terms of its 2023 senior notes at the holding company level, as the telecommunications firm seeks to restructure its Us$4.55-billion debt pile.
The consent solicitation expired last Friday, with at least 80 per cent of noteholders in aggregate principal having their consents validly delivered as per Epiq Corporate Restructuring, LLC. The green light by noteholders gave way for an additional 15-day extension to the 90-day grace period on the 6.75 per cent notes which were originally due on March 1.
While this one transaction paves the way for a planned Us$1.8-billion reduction in its total debt, it would still see Digicel founder Dennis O’brien’s ownership cut to 10 per cent from the current 99.9 per cent stake, as the current debt holders would receive equity. However, his stake could increase again to 20 per cent if certain warrants attached to the restructuring are exercised.
Digicel is continuing negotiations with secured debt holders of bonds held by Digicel International Finance Limited (DIFL) and ad hoc crossover holders related to the other portion of the company’s debt. The debt restructuring situation has also pushed Digicel’s credit rating from C to RD (restricted default) by credit rating agency Fitch Ratings, in its latest update on May 22.
DIFL commenced a consent solicitation on April 26 related to its 2024, 2025 and 2026 notes in which it was noted that Digicel Group Holdings, DIFL and DL would attempt to enter a restructuring support agreement (RSA). DIFL was supposed to seek a new bridge loan facility of US$100 million to complete the RSA, which was to be secured under the collateral covenant of the note indenture.
The Irish Times noted on Monday, “It is envisaged that the restructuring will be completed through a socalled scheme of arrangement carried out in Bermuda and rubber-stamped through a US reorganisation under Chapter 15 bankruptcy protection. This is similar to how Digicel carried out another debt restructuring in early 2020, when debt investors agreed to write off $1.6 billion of Digicel’s then $7-billion debt mountain.”
“While no definitive agreement concerning the material terms of such a transaction has been finalised, and no assurances can be provided that it will be finalised, based on negotiations to date and agreement in principle on key terms, the company believes a consensual and comprehensive restructuring is achievable in the near term. The company expects to announce further updates in the near term,” Digicel stated in a press release.