Business

Digicel completes restructuring that cuts O’Brien stake to 10%

Denis O’Brien’s holding may double to 20% should warrants attached to the restructuring ultimately be triggered

Digicel founder Denis O'Brien has seen his stake in the company slide to 10% under a debt restructuring completed in January.

Joe Brennan
Mon Jan 29 2024 - 19:59

Digicel confirmed on Monday it has completed a massive restructuring that saw a group of bondholders take control of the company under a $1.7 billion (€1.57 billion) debt-for-equity swap that saw founder Denis O’Brien’s stake slashed to 10 per cent.

A reconstitution of the board has seen Mr O’Brien step down as executive chairman, but remain a non-executive director. As previously announced, he has been succeeded in the chair by Rajeev Suri, a UK-based executive who has worked in the sector for 35 years, including periods at the helm of Nokia and UK satellite group Inmarsat.

“It’s good news today for our customers, our communities and all our staff with Digicel on a more solid financial footing enabling it to maintain and increase its long-standing commitments to the region,” said Digicel’s interim chief executive, Maarten Boute, of a company that operates in 25 markets across the Caribbean and Central America.

A consortium of bondholders led by PGIM, Contrarian Capital Management, and GoldenTree Asset Management has taken control of the group under the third Digicel debt restructuring in five years. The latest scheme reduces the company’s debt to an estimated $3.1 billion, compared to a peak of over $7 billion in early 2019.

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Mr O’Brien may ultimately end up with as much as 20 per cent of the company, should warrants attached as an incentive to the restructuring end up being triggered.

The Jamaica-based group’s annual cash interest expense reduced by about $120 million as a result of the latest debt overhaul.

Digicel, founded by Mr O’Brien in 2001, has spent €5 billion over more than two decades building out mobile and other telecoms networks across the business, 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.

The group’s earnings slumped over the following years amid declining voice sales and currency fluctuations across its markets, compounded by economic and political volatility in one of its key locations, Haiti.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times

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