JSE-listed Blue Label Telecoms and Cell C have reached an 11th-hour agreement that now appears to pave the way for a major restructuring of the debt-laden mobile operator.
In a statement to investors on Monday afternoon — just a day before a deadline to finalise a deal — Blue Label said it has reached a “binding umbrella restructure agreement” with Cell C, its debt providers, a third-party investor (presumably Net1 UEPS Technologies) and “other relevant parties”.
However, Blue Label said the binding agreement is “subject to the conclusion of the relevant transaction agreements, which agreements are expected to be unconditional by no later than 30 June 2017”.
In terms of the agreement, Cell C’s net borrowings will be reduced to R6bn (from more than R20bn).
The third-party investor, which Blue Label doesn’t name (though it’s named Net1 in previous communication to shareholders), will subscribe for 15% of Cell C’s share capital for R2bn, while Blue Label will buy 45% of the business for R5,5bn, the same as before).
The agreement may now have scuppered any hope Telkom had to snatch a last-minute deal to acquire Cell C from under Blue Label’s nose.
Some of Cell C’s lenders — believed to include Chinese and South African banks — had shopped around for interest from other parties to make a bid. This prompted Telkom to lodge a “proposal” with Cell C’s board, which the board last week rejected out of hand.
Cell C, meanwhile, said the agreement sets out the framework and agrees the key principles by which the debt will be reduced through a combination of fresh equity injections and an exchange of Cell C debt for equity.
“Cell C would like to thank its key lenders including Nedbank, Industrial and Commercial Bank of China, China Development Bank and the majority of euro bondholders for their continued support and participation throughout the recapitalisation process. The written commitments of support from the Development Bank of Southern Africa have also contributed to reaching this milestone.”
The company said its customers could now “look forward to more innovation, value and exciting new products and services, which will be announced in the coming weeks”.
“The company will continue its aggressive roll-out of new network technologies, including LTE-Advanced to ensure customers enjoy a quality experience with enhanced capacity and speed.” — (c) 2017 NewsCentral Media
