Digicel tells bondholders of its plans to reduce debts

Denis O’Brien-owned group to cut capital expenditure by 30% and reduce borrowings

Denis O’Brien’s Digicel is meeting investors on a roadshow. Photograph: PA Wire

Denis O’Brien’s Digicel is meeting investors on a roadshow. Photograph: PA Wire

 

Denis O’Brien’s Digicel Group, the mobile carrier, has told bondholders it plans to cut debt through a mixture of earnings growth and so-called inorganic measures, sources said.

Digicel aims to reduce borrowings to about 5.7 times earnings in the fiscal year 2019 from around 6.7 times in the preceding year, the sources said.

Capital expenditure will be reduced to between $330 million and $350 million, a drop of about 30 per cent.

Mr O’Brien founded Digicel in 2001 and turned it into a mobile phone empire with customers spread from El Salvador to Vanuatu, financing the expansion partly with high-yield debt.

Non-deal roadshow

The company is meeting investors in a so-called “non-deal roadshow” as the yield on its 2020 bonds rises as high as 20 per cent, more than doubling in the last three months.

Digicel told bondholders that it’s on track to meet its earnings guidance – for adjusted earnings before interest, taxes, depreciation and amortisation (ebitda) of just over $1 billion in the fiscal year 2018. It also said it’s sticking to sales guidance of about $2.4 billion, and detailed a new contract win, according to the sources.

A company spokesman declined to comment. – Bloomberg