Digicel may not be able to meet debt burden as unwanted asset sales drag on

Denis O'Brien's telecommunications group Digicel has indicated to creditors that it may not meet its debt burden target for its current financial years, as the sale of unwanted assets drag on, according to sources.

The group, which has a $6.7 billion (€5.8 billion) debt mountain and has operations spanning 31 markets across the Caribbean and Asia Pacific regions, had previously forecast that it would lower its debt to 5.7 times earnings before interest, tax, depreciation and amortisation (ebitda) by the end of its financial year to March 2019. The ratio stood at 5.7 times last March.

The guidance was premised on Digicel raising as much as $500 million on asset sales and increasing its full-year ebitda by about 10 per cent on the year to $1.1 billion.

Delay

However, sources said that Digicel executives signalled on a call with analysts and bondholders on Thursday that there may be a delay in delivering the asset-sales proceeds. A spokesman for the company declined to comment.

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The development comes a day after Digicel reported quarterly figures and as it continues talks, which began in late August, to delay the repayment of $3 billion of bond debt.

The company raised nearly $84 million on a sale and leaseback deal on 451 Jamaican mobile phone towers during the period. It is also set to generate $55 million on a similar sale involving a portfolio of South Pacific towers by the end of December.

Securities

The company, meanwhile, is looking for investors holding $2 billion of bonds due in October 2020 to swap their notes for similar securities that would be due two years later. The group also wants holders of $1 billion of debt that matures in 2022 to exchange their bonds for new 2024 notes.

Digicel said on Tuesday that it had extended the deadline for the bond swap for a fifth time in just over two months as it continued to talk with bondholder representatives on the matter. The current extension is by one week to December 7th, suggesting that talks are not at a critical point, as the previous extension had been for two weeks.