Digicel increases bond offering to $1bn

Digicel Limited, the company that runs Denis O’Brien’s mobile phone operation in the Caribbean region, has increased the size of its latest bond offering by 43 per cent to $1 billion.

This has emerged from the publication of a 300-page prospectus for the senior notes, which will carry an interest rate of 6 per cent and will be due for repayment in 2021.

Digicel Ltd had previously announced plans to raise $700 million in bonds to repurchase notes that are due for repayment in 2014 and carry a coupon of 12 per cent.

The principal amount outstanding on these notes is $510 million. This includes $15 million held by Mr O’Brien, Digicel’s co-founder and chairman.

The Irish entrepreneur has earned $1.8 million in annual interest payments from the bonds since they were issued to him on March 20th, 2009.

Transaction fee

The bond document notes that Island Capital Services Ltd, a Dublin-based company controlled by Mr O’Brien, is entitled to a transaction fee of 0.5 per cent or $5 million from this capital raising.

Island Capital’s “advisory services and monitoring agreement” has been extended until January 22nd, 2014, which entitles it to an annual management fee of $500,000 from Digicel.

The document details other fees paid by Digicel to companies connected to Mr O’Brien.

In the six months to the end of September 2012, it paid $323,000 to Dublin-based Communicorp Group Ltd for office space, printing and telecom services. It paid $400,000 over the same period to Communicorp subsidiary ICAN for internet and intranet services.

Digicel Ltd also paid rental charges of $3.2 million to rent an aircraft from AC Executive Aviation Services Ltd.

Digicel Ltd operates in 24 markets. This is mostly in the Caribbean but also includes El Salvador, Guyana, Suriname and French Guiana.

Haiti overtakes Jamaica

The document shows that the impoverished state of Haiti has overtaken Jamaica as Digicel’s biggest market in terms of revenues and profitability.

In the six months to the end of September 2012, Haiti generated operating profit of $49.5 million on revenues of $277.5 million.

Jamaica generated an operating profit of $45.2 million from revenues of $243 million during the same period.

Digicel had 4.2 million subscribers in Haiti at the end of December, twice the level in Jamaica.

Digicel Ltd’s subscriber base grew 8.6 per cent to 10.2 million in the year to the end of December 2012.

Its total revenues rose 4 per cent to $549.9 million in the three months to the end of December 2012. However, its operating profit declined 8.3 per cent to $136.5 million.

Digicel paid $1.9 million to eight directors, including Mr O’Brien but excluding chief executive Colm Delves, in the six months to the end of September.