Concurrently, in its latest assessment of the telecoms, ratings agency Fitch downgraded some Digicel bonds for the third time from C to RD, or restricted default.
“The completion of the restructuring is due to be completed towards the end of the year, subject to required regulatory and other governmental approvals,” said Fitch in a release.
Chairman and founder of Digicel Group Denis O’Brien agreed in March to give up his majority holdings to creditors as part of a debt-conversion deal, but the Irish billionaire, who launched the telecoms in Jamaica a decade ago then grew it to more than 30 markets using debt financing, will retain a minority stake in the business and remain a director.
Fitch said the secured bondholders could end up losing 10 per cent of their principal, while unsecured creditors may lose up to half of their investment.
“Creditors will become the main shareholders of the new group’s structure,” Fitch affirmed.
The proposed comprehensive financial restructuring will convert 100 per cent of the Digicel Limited bonds and the Digicel International Finance Limited subordinated debt into equity, and refinance and extend the maturity of the company’s other funded indebtedness.
It’s expected to cut Digicel’s overall debt from US$4.7 billion to about US$3 billion.
Notwithstanding the restructuring deal, Fitch downgraded Digicel’s debt last week, saying the “original grace period” relating to bondholder payments had expired.
Digicel Group projects that it will achieve core EBITDA or earnings before interest tax, depreciation and amortisation of US$550 million in 2024. Fitch agrees with that assessment and has assigned Digicel an enterprise value — which tallies assets and debt — of about US$2.7 billion or five times its core earnings.
The rating agency says its multiple of five times EBITDA reflects Digicel’s “long-term prospects and good market share in mostly duopoly markets amid a scenario of financial distress”.
