Digicel settles for less

By Steven Jackson, Jamaica Gleaner

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(DIGICEL) — Telecommunications provider Digicel Group disclosed a new deal that has been largely accepted by irate bondholders, which includes concessions on a better interest rate for one bond and for the other, reducing the amount of debt set for extension.

The new bond swap offer also cuts the amount of debt to be refinanced by a third.

“Digicel received from holders valid and unrevoked tenders of $1.89 billion aggregate principal amount of the existing 2020 notes,” said the telecoms in a statement aimed at overseas bondholders.

Digicel reported 94.7 per cent acceptance of its bond refinancing offer on December 19. Other bondholders had up to Friday, December 21 to participate in the swap that extends the maturity of the debt by two years.

Initially, Digicel was seeking to refinance US$3 billion of its bonds, but was forced to revise its offer after bondholders revolted.

The new plan sees up to US$1 billion of 2020 notes extended to 2022 at the initial offer rate of 8.25 per cent. That tranche was originally targeted to swap US$2 billion of bonds for longer maturities.

The second tranche of debt remains at US$1 billion and will be extended from 2022 to 2024. The difference, however, is in the interest rate, which will move from 7.125 per cent being swapped for 9.125 per cent. The original offer was to increase the interest rate to 8.25 per cent.

Akin Gump

In September, independent bondholders hired the law firm Akin Gump to seek better refinancing terms from the telecoms. That group of independent bondholders represented some 60 per cent of the funds set for refinancing.

Digicel Group’s leverage hovers at 6.7 times gross debt-to-EBITDA. The original refinancing offer was expected to eventually cut that by ‘one turn’ to 5.7 times, but with the new offer it’s unclear what precise debt levels will result from the transaction.

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