Cell C is in the process of raising US$600m, or about R8,5bn, to prop up its balance sheet, given its crippling debt load of R23,6bn.

The company’s management is currently on a roadshow in London to drum up support among investors, as the efforts to restructure South Africa’s third largest mobile operator continue.

The company has proposed a $600m raise through the issue of senior secured bond notes that are due in 2021.

Its capital efforts follow the announcement early this month that prepaid technology specialist Blue Label Telecoms will buy a 45% stake in Cell C, a transaction valued at R5,5bn.

This was a step up from the initial proposed recapitalisation — which was a R4bn capital injection in exchange for a 35% stake in Cell C, announced in December.

Cell C’s recapitalisation programme will result in a shareholding structure change – with management and staff of Cell C expected to subscribe for 25% of the issued capital and 3C Telecommunications subscribing for new equity to hold the remaining 30% of the total issued share capital.

The recapitalisation is expected to be finalised mid-November 2016.

On Monday, ratings agency Moody’s placed Cell C’s B3 investment grade rating under review and is looking to assign a B2 rating on its proposed notes to raise capital. A B3 investment grade is typically regarded as high credit risk.

Any upgrade of its rating hinges on the successful implementation of its recapitalisation, which will see a R16bn equity injection from new and existing shareholders and the R8,5bn raise, which is expected to reduce Cell C’s debt to R8,5bn from R23,6bn.

Says Moody’s vice-president and senior analyst Dion Bate in a statement: “Our review for upgrade reflects the expected reduction in Cell C’s gross debt obligations to around R8,5bn and improved leverage and interest coverage metrics as a result of approximately R16bn of equity injections but also recognises that there are still a number of conditions that need to be satisfied.”

Cell C has struggled to keep up with its rivals Vodacom and MTN over the past five years, given their increasing dominance in a competitive telecommunications market with more revenue potential in data than voice.

To claw back market share, Cell C has embarked on aggressive cost-cutting initiatives and focused on improving its network quality and customer service offering.

Cell C hadn’t responded to a request for comment by the time of publishing.