O’Brien seeking to raise $300m via bond offering

Further financing an extension of $1 billion fundraising closed in early March by mobile phone group

Denis O’Brien

Denis O’Brien


Denis O’Brien is seeking to raise another $300 million (€230 million) via a bond offering for the Caribbean and Americas operations of his Digicel mobile phone group.

This is effectively an extension of a $1 billion capital raising completed by Digicel Ltd earlier this month. These latest bonds have the same maturity date of April 15th, 2021, and also carry a coupon of 6 per cent.

Interest on the notes will be backdated to March 5th to run in parallel with the existing bonds issued earlier this month and will be paid twice a year on April 15th and October 15th.

The prospectus for this latest capital raising states that Digicel might redeem up to 35 per cent of the notes, plus accrued and unpaid interest, prior to April 15th, 2016, at a price of 106 per cent of the principal.

‘Corporate purposes’
Digicel Ltd has told investors that it plans to use the estimated $297 million net proceeds for “general corporate purposes”, which could include capital expenditures, acquisitions, debt repayment or dividends to parent group Digicel Group Ltd (DGL), which is 94 per cent owned by Mr O

’Brien on a fully diluted basis.

The latest bond offering by Digicel is also likely to heighten speculation that the funds could be used for a tilt by its parent group, DGL, at securing a licence in Myanmar. Digicel is one of a large number of international telcos vying to secure one of the licences being offered to the market in Myanmar and Mr O’Brien has estimated the project costs between $1 billion and $2 billion.

Digicel Ltd operates in 24 markets in the Caribbean, El Salvador, Guyana, Suriname and French Guiana.

The company’s revenues grew by 4 per cent year-on-year to $549.9 million for the quarter ended December 31st, 2012. However, its operating profit declined by 8.3 per cent to $136.5 million.

Digicel Ltd said its underlying expenses in the quarter were 9 per cent higher at $160 million, due largely to higher costs in Haiti following the merger and integration of rival Voila.

Its depreciation and amortisation charge rose to $72.4 million from $60.9 million a year earlier.

The mobile group had total debt of $2.5 billion at the end of 2012, which represented a ratio of 2.8 times its earnings before interest, tax, depreciation and amortisation.

Digicel Ltd paid $266.9 million in interest payments to service its debts in the 18 months to the end of September 2012. It also made payments of $833 million to its parent entity, DGL, over this period. some of which was used to meet that company’s interest payments.