Denis O’Brien’s Digicel is on track to secure another extension on Friday to a grace period on $925 million (€838 million) of overdue debt, as work on details of a wider restructuring of the telecoms group’s debt mountain continues.
The $925 million of bond debt had been due to be repaid on March 1st. However, the overindebted company did not have enough money to redeem the bonds.
Digicel said the day before the borrowings fell due that it had reached an agreement in principle with group of bond creditors to swap $1.8 billion of its borrowings for an equity stake in the business.
Mr O’Brien’s stake will fall to 10 per cent as a result, though he may see his holding increase again to as much as 20 per cent, should warrants attached as an incentive to the restructuring end up being exercised.
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The company secured an initial 30-day grace period at the outset on the March 2023 bonds, as it sought to progress the wider debt overhaul plan in principle without a default event being triggered on the overdue borrowings.
That was extended by a further 15 days two weeks ago and is likely to be pushed out again on Friday, as discussions on the finer details of the plan continue, according to market sources.
The proposal would see holders of the March 2023 notes and a group of subordinated bond investors converting the combined $1.18 billion that they are owed for a 90 per cent stake in the group. Two other categories of bondholders will end up writing off most of their combined $640 million investment.
Founded by Mr O’Brien in 2001, Digicel has spent €5 billion over more than two decades building out mobile and other telecoms networks across as many as 33 markets, funded mainly by junk bond sales. Mr O’Brien also extracted at least $1.9 billion of dividends from the group between 2007 and 2015.
