Digicel seals $335m corporate bond deal

DENIS O’BRIEN’S Caribbean-based mobile phone group Digicel yesterday confirmed that it has completed a $335 million (€260 million) corporate bond offering, carrying a coupon of 12 per cent.

The fundraising will result in Mr O’Brien earning about $143.5 million from the sale of equity in Digicel’s Central American business.

The $335 million bond offering was completed by Digicel Limited, a Bermuda-based company that operates in 24 markets in the Caribbean and El Salvador.

Digicel Ltd plans to use $215 million to buy a 35.8 per cent equity stake in Digicel Holdings (Central America) Ltd, a sister company that runs Mr O’Brien’s mobile operations in Honduras and Panama.

Digicel chief executive Colm Delves said about $50 million of this sum would be reinvested in the Central American business with the balance split between Mr O’Brien, minority shareholders and those holding options and warrants.

Mr O’Brien is understood to own about 87 per cent of Digicel’s Central America business.

Digicel said $120 million from the bond issue would be used for “general corporate purposes” in its Caribbean operation.

Digicel raised $100 million less than it had originally indicated to the market last week but Mr Delves said the company was delighted with the level of funds secured given the current global credit crisis and the failure of some large companies in the region to secure external funding.

“It’s a vote of confidence in Digicel,” Mr Delves told The Irish Times. “We’re very satisfied with the size and with the pricing. This gives Digicel Limited further growth upside going forward.” Mr Delves said Digicel’s businesses in Honduras (launched last November) and Panama (opened in December) are “going gangbusters” and subscriber levels there were 50 per cent ahead of budget by the end of last year.

He said the funds would allow Digicel to “accelerate” its growth plans for the two markets. The new funding will increase Digicel’s debt level to about $3.2 billion.

Mr Delves said Digicel was not planning to launch in other Central American markets in the short term but it would examine any opportunities that emerged. “There is a potential opportunity in Costa Rica,” he said. “They are proposing to deregulate that market in early 2010 and we will certainly look at it.”

He said Digicel would also like to enter Cuba. “It’s a potentially exciting market with a population of 11 million and low mobile phone and fixed-line penetration.”