Businessman Denis O'Brien's Digicel has taken legal action seeking an additional €80 million from French telecoms giant Orange in relation to a long-running anti-competitive practices dispute in the Caribbean, The Irish Times has learned.
The Paris Commercial Court ruled last December that Orange pay Digicel €179.6 million in damages, plus costs and interest calculated off an annual rate of 10.5 per cent dating back to March 2009. It came as the French group was found to have abused its dominant position in the French West Indies.
Orange said in its latest financial report for the first half of 2017 that it had set aside €346 million in an escrow account to cover the cost. However, Digicel claims the award should be €426 million – some €80 million higher – as the interest should be calculated on a compound basis rather than the simple interest formula used by Orange.
Legal correspondence, seen by The Irish Times, shows that the Digicel case will come before the Paris Court of Appeal on September 4th.
Separately, Orange appealed the December ruling in April with the same court, and its chief financial officer, Ramon Fernandez, told analysts late last month on a conference call that the company was "confident that the court should reduce the amount at stake". Digicel is also said to be confident that its position will be upheld by the appeals court.
A spokeswoman for Orange declined to comment, while a spokesman for Digicel said the company was “unable to comment on ongoing litigation”.
The ultimate amount of damages, stemming from allegations made against Orange of anti-competitive practices between 2000 and 2005 across seven islands that make up the French West Indies, would help Digicel as it comes under pressure from bond investors to lower the burden of its $6.6 billion (€5.8bn) net debt mountain. However, it is understood Mr O’Brien will have to share some of the money with French phone group Buoygues Telecom, which sold its French West Indies business to Digicel in 2006.
Meanwhile, Digicel is planning to raise $500 million from asset sales and increase earnings before interest, tax, depreciation and amortisation (ebitda) by 10 per cent to $1.1 billion in the current financial year to the end of March. This is in order to meet a key pledge to bondholders that it will reduce its net debt to 5.7 times ebitda from 6.7 in the space of 12 months.
The deleveraging plan is seen as crucial as Digicel eyes a refinancing of $2 billion of bonds that are due to be redeemed in September 2020. The bonds are currently trading at 69c on the dollar, down from 100c in January.
This has been driven as investors fret over the group’s ability to refinance the debt well ahead of schedule and amid a broader sell-off of emerging market debt, which has been exacerbated recently by Turkey’s ongoing financial crisis and a rise in the value of the dollar.
Digicel has previously said that it has “a very strong track record of refinancing comfortably ahead of bond maturities”.