Digicel said to be edging toward debt deal

Denis O'Brien's telecoms company, Digicel, is edging toward an accord with some investors to push out a share of its debt after months of negotiations, according to a person familiar with the talks.

The company is offering new secured bonds maturing in 2022 in exchange for $2 billion (€1.76 billion) of unsecured notes originally due in September 2020 and may announce at least a portion of its investors have taken up of the offer as soon as Tuesday, said the person who asked not to be named as the information is not yet public.

Bondholders balked at elements of an exchange plan outlined by Digicel in August and quickly organized to push for better terms. This month, Digicel extended the deadline for take up of the offer to December 18th and sweetened the terms. The company has been reviewing options to tackle debt used to turn the mobile-phone carrier into a global operation, with customers spread from El Salvador to Vanuatu.

If the offer is not completely taken up tomorrow, Digicel may offer a further deadline extension for the remaining investors , the person said. The company’s September 2020 bond yields 35 per cent, up from about 21 per cent in July.

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Digicel is also negotiating a separate bond swap involving debt currently due in 2022. The deadline for bondholders to accept an offer in respect of those bonds remains at December 21th.

The company declined to comment.

Deal Tweaks

The debt exchange offer now prohibits payments to Denis O’Brien or any entity he controls in connection with it, according to a covenant review report. It also restricts the ability to transfer funds to equity until the 2022 credit agreement has been repaid in full, and sets conditions for asset sale proceeds to be used to repay the agreement.

The revised debt exchange also restricts the ability of the company to incur new debt secured by the equity of Digicel, the covenant review said. – Bloomberg