Denis O’Brien’s Digicel said on Friday it has managed to secure backing from two key groups of creditors to advance a massive debt restructuring that would see $1.8 billion (€1.66 billion) of borrowings written off and the businessman’s stake fall as low as 10 per cent.
More than three-quarters of holders of $1 billion of term loans and $1.2 billion of senior secured bonds issued by the group’s Digicel International Finance Limited (DIFL), who were being asked to delay repayments but avoid a haircut on what they were owed, have now agreed to back the wider debt overhaul. They had held out until now, as they haggled over interest, or coupon, payments.
The restructuring is the result of Digicel not having enough money to repay $1.3 billion of bonds that were due at the start of March. Creditors initially granted it a 30-day grace period to secure a wider agreement on borrowings.
The so-called March 2023 bondholders have now granted Digicel a further 15-days’ grace to formalise a restructuring support agreement, which would “recapitalise the business and place it on a firm and sustainable footing for the future”.
An ad hoc group of so-called crossover bondholders, who own large portions of various categories of Digicel debt, have also agreed to back the restructuring, Digicel said.
The reorganisation would see Digicel’s borrowings fall by $1.8 billion – or about 40 per cent – as bondholders swap much of its debt for equity.
The plan would see holders of the March 2023 notes and a group of DIFL subordinated bond investors converting the combined $1.18 billion that they are owed for a 90 per cent stake in the group. Two other categories of bondholders will end up writing off most of their combined $640 million investment.
Digicel, founded by Mr O’Brien in 2001, has spent €5 billion over more than two decades building out mobile and other telecoms networks across as many as 33 markets, funded mainly by junk bond sales. Mr O’Brien also extracted at least $1.9 billion of dividends from the group between 2007 and 2015.
The company has gone through two other debt restructurings in recent years. The businessman may ultimately end up with as much as 20 per cent of the company, should warrants attached as an incentive to the latest restructuring end up being triggered.