Blue Label finalises Cell C liquidity deal

SOUTH Africa’s Blue Label Telecoms Ltd announced yesterday that it had concluded an agreement to restructure and refinance mobile operator Cell C’s R7.3 billion debt to bolster its finances and liquidity.

The agreement with Cell C’s shareholders and lenders is a final and critical step in the mobile operator’s turnaround plan, which included deleveraging its balance sheet and providing liquidity to operate.

Shares in Blue Label, which bought a 45% stake in Cell in 2017, were up 5.6% to R6.60 by 9.44am on the announcement.

Blue Label has been trying to dig Cell C out of debt since it purchased the stake. It said the Cell C recapitalisation would enhance its investment and restore shareholder value.

As part of the agreement, The Prepaid Company (TPC), a subsidiary of Blue Label, will lend Cell C R1.03bn to settle the claims of secured lenders by paying an amount of 20 cents for every R1 of debt, as per the accepted compromise offer, Blue Label said.

Secured lenders who have elected to remain invested in Cell C will lend the carrier an amount equal to the compromise offer under a new loan arrangement, it added.

“This new loan arrangement will be interest bearing, secured and give an aggregate capital face value equal to 2.75 times of the amount advanced,” Blue Label said.

All participating lenders in the new loan will be issued shares in Cell C. The carrier will also issue shares to Blue Label via a rights issue, increasing its stake to 49.53%. To further help Cell C with its working capital requirements, TPC shall buy Cell C’s pre-paid airtime for R1.5 billion. |