JSE-listed Blue Label Telecoms, through its subsidiary The Prepaid Company (TPC), has announced it will acquire 45% of Cell C for R5,5bn.
It had previously said it intended buying 35% of the mobile operator for R4bn as part of its recapitalisation.
The effective date for the acquisition has been set as 18 November.
The deal, which has been under discussion since December 2015, will result in Cell C’s debt being reduced to a maximum of R8bn.
The management (10%) and staff (15%) of Cell C will subscribe for 25% of the issued capital and 3C Telecommunications will subscribe for sufficient new equity to hold the remaining 30%.
Following completion of the deal, between 32% and 36% of Cell C’s equity will be in black hands. “We’ll be strongly empowered. Not only have we maintained the empowerment status of Cell C, but we have improved on it. That’s a feather in the cap of the restructuring,” said Blue Label co-CEO Brett Levy on a conference call on Wednesday afternoon.
Cell C’s current shareholding structure includes a 60% stake by Oger Telecom South Africa, a 15% stake by Lanun Securities and a 25% stake by CellSAF in 3C Telecommunications, which in turn owns 100% of the mobile operator’s equity.
Explaining why it’s doing the deal, Blue Label said in a statement to shareholders that for a number of years, it has acted as one of the primary distribution channels for Cell C.
“This has resulted in the development of a strong relationship between Blue Label and Cell C. The proposed transaction provides a compelling value proposition to Blue Label, as well as to Cell C and its customers, affording both companies the opportunity to realise synergies in product distribution, and positioning Blue Label to benefit from the improved operational and financial performance that the combined platform will create,” it said.
“The transaction structure allows 3C to remain invested and participate in the value creation arising from this new strategic relationship between Cell C and Blue Label,” it added.
Blue Label, through TPC, will settle the R5,5bn acquisition price with R2bn via a vendor consideration placement with Net1 UEPS Technologies at a price of R16,96/share, which represents a 10% discount to Blue Label’s 30 business day weighted average traded price. Net1 will take a 15% equity stake in Blue Label. The remaining R3,5bn will be settled using Blue Label’s available cash and funding facilities.
The company said it has already obtained irrevocable undertakings from shareholders representing 51,7% of its shareholders to vote in favour of the proposed transaction. — © 2016 NewsCentral Media
