Digicel has signalled to bond investors that a planned early refinancing of some of its $2.8 billion (€2.6 billion) debt is on hold as uncertainty continues to hang over a US department of justice case looking into whether the company breached foreign bribery laws, according to sources.
The company, which completed a major debt restructuring early last year that saw founder Denis O’Brien cede 90 per cent of the business to a group of bondholders, saw earnings before interest, tax, depreciation and amortisation (ebitda) grow an annualised 3 per cent to $195 million in the three months to December, its financial third quarter, the sources said.
The earnings improvement came even as revenues remained flat, at $460 million, said the sources, who are familiar with Digicel’s most recent quarterly report circulated to bondholders.
While Digicel continues to have earnings problems in Haiti, which has been plagued in recent years by gang violence, and is feeling increased competition in the French West Indies from Eir owner Xavier Niel’s Iliad telecoms business, Jamaica, its biggest-earning market, is doing well, they said. Digicel’s struck a deal in 2020 to allow Iliad to use its mobile network across the French West Indies.
Other areas of Digicel’s network of 25 markets across the Caribbean and Central America were generally flat on the earnings front during the reporting period.
A spokeswoman for Digicel declined to comment on the latest quarterly report and round of bond investor briefings.
A consortium of bondholders led by PGIM, Contrarian Capital Management, and GoldenTree Asset Management took control of Digicel in January 2024 as they swapped $1.7 billion of its borrowings for a 90 per cent stake. It marked the group’s third debt restructuring in five years.
Digicel’s debt mountain peaked at more than $7 billion in early 2019.
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Under the restructuring, Digicel issued about $1.25 billion of senior secured bonds and a term loan of about $1 billion, both of which fall due in May 2027. It also issued about $419 million of senior unsecured notes. Interest on some of Digicel’s debt has been allowed to accumulate since then, increasing the overall principal.
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The new management team that took charge following the restructuring, including chief executive Marcelo Cataldo and chief financial officer Leopoldo Gutierrez, is keen to refinance the senior unsecured bonds and term facility well in advance of the maturity, according to sources.
The first refinancing since the restructuring would be seen as a major milestone for the company.
However, the sources said Digicel executives have signalled to bondholders recently that a refinancing is on hold for now, given uncertainty over the future direction of the US department of justice case.
Digicel, which is based in Jamaica but uses the US bond market to raise borrowings, said in November that it had made a voluntary disclosure to the department of information “relating to possible violations of the US Foreign Corrupt Practices Act” (FCPA).
The group was “co-operating fully” with the US department of justice, it said at the time, adding that it was “committed to conducting business in adherence with laws and regulations of the jurisdictions in which we operate, supported by a rigorous ethics and compliance programme”.
The Digicel disclosure to US authorities is said to relate to activities in Haiti, which has again descended into chaos in recent years as criminal gangs have grown in power. Armed gangs currently control of almost all of the country’s capital, Port-au-Prince.
The case has been in limbo since February 10th, when US president Donald Trump paused FCPA enforcement actions for at least 180 days.
