O'Brien earns €603m in Digicel refinancing

Telecoms tycoon Denis O'Brien has realised a profit of up to $800 million (€603.8 million) after refinancing Digicel, his Caribbean mobile phone operation.

Four of Mr O'Brien's closest associates - one of them his father, Denis snr - realised $225 million in the same series of transactions in which he took total control of Digicel. The biggest beneficiary among these associates was former business consultant Leslie Buckley, whose Digicel shares are understood to have been valued at $105 million.

Denis O'Brien snr will receive $65 million, it is understood, and former Esat Telecom executive Lucy Gaffney will receive $35 million. In addition, former Digicel chief executive Séamus Lynch will receive $20 million.

Another beneficiary was the US private equity giant Blackstone, which received $62 million for its Digicel shares.

Each of Digicel's vested option holders - including former Government press secretary PJ Mara and accountant Greg Sparks - will receive less than $5 million in respect of their interests in the group.

Senior Digicel management and staff figures also sold down their vested options to Mr O'Brien. The totality of the vested options in Digicel were valued at $90 million.

Mr O'Brien was both a buyer and seller in transactions yesterday that saw Digicel Ltd, which ran the mobile operation since its establishment in 2000, sell the business to Digicel Group, a newly-formed vehicle 100 per cent owned by him.

Incorporated in Bermuda, Digicel Group paid $2.4 billion in cash for Digicel Ltd. This deal valued Mr O'Brien's 78 per cent stake in Digicel Ltd at $1.87 billion. He reinvested some $1.1 billion in Digicel Group, leaving him to receive the balance.

The remainder of the purchase was financed with the proceeds of a $1.4 billion issue of high-yielding junk bonds last week on the US capital markets. The bond issue was five times over-subscribed, Digicel said yesterday.

Led by investment banks Citigroup and JP Morgan Chase, the issue also involved Lehman Brothers, Credit Suisse and Irish brokers Davy and Goodbody.

Digicel Group raised $1 billion in cash-pay notes at a coupon of 8.875 per cent. It also raised $400 million in payment-in-kind "toggle" notes with a 9.125 per cent coupon. Such notes can pay interest in cash or additional notes at the issuer's discretion.

Digicel said it received orders from some 300 accounts in the US, Europe and the Caribbean.

"The response to our offering reflects the confidence in the prospects for future growth and development of Digicel under the direction of a dynamic management team and a dedicated workforce," said Mr O'Brien.

Active in 22 markets, Digicel has more than four million subscribers. Its revenues in the six months to September 2006 reached $948 million on an annualised basis.

In anticipation of a move into the US mobile market, Mr O'Brien had planned to float the business on the New York stock exchange.

He scrapped both those plans before moving ahead with the refinancing.