Blue Label Telecoms indicates that it has concluded the recapitalization of Cell C through a binding long-term agreement with the mobile operator and various financial players.
In mid-2019, Cell C embarked on a turnaround strategy, focusing on operational efficiency, reducing operational expenses and optimizing traffic.
This included moving from a capital-intensive, built-and-owned network model to an infrastructure-sharing model that provides variable operational expenses and is scalable, Blue Label noted.
“Together with the recapitalization of the current debt structure, this will result in a significant improvement in liquidity and ensure the long-term viability of Cell C,” he said in a statement on Thursday, September 22.
Douglas Craigie Stevenson, CEO of Cell C, said: “The recapitalization was the final and essential pillar of Cell C’s turnaround strategy; deleveraging the balance sheet, providing cash to operate, and setting the business on a path of long-term growth and sustainability.
“We are extremely pleased and humbled to have received the support of our many stakeholders, especially our shareholders, our infrastructure partners who believed in our new model, embraced the new business strategy and supported the vision of the recovery and our customers for their patience. »
The CEO said that the first day after the wrap-up Cell C will have achieved a significant reduction in debt.
“I can say with humility to all South Africans, Cell C is ready to invest in bringing great value to our customers – which has been the hallmark of our heritage for over 21 years – but now we can also truly claim to have a quality network with access to more than 8,775 sites, 96% of which are LTE-enabled at the end of August 2022 and more to come by the end of 2023.”
He said that in the short to medium term, Cell C will focus on implementing its network migration by the end of 2023 to get us to 14,000 sites.
It will also target wholesale, pursue its ambition to become a digital business, and build a high performance culture with digital skills for employees.
Cell C debt restructuring
To facilitate the restructuring of Cell C’s debt owed to certain secured lenders, totaling R7.3 billion (fixed in November 2019), Blue Label will provide liquidity via a secured loan of R1.46 billion;
Part of the R1.03bn of this debt financing will be used to pay secured lenders in accordance with the accepted offer in compromise of 20c for every R1 of debt.
Secured lenders who chose to remain invested in Cell C will lend an amount equal to the 20p received from the Offer in Compromise under a new loan agreement called the reinvestment instrument.
This new loan agreement will bear interest, be secured and give a total face value of the principal equal to 2.75 times (or 55c) of the amount advanced.
All participating lenders to the new loan will have the right to participate pro rata in a new issue of common stock of Cell C at par. All current shareholders will dilute proportionately to permit this new issuance of common stock.
The Prepaid Company (TPC), a Blue Label subsidiary, will own 49.53% of the shares of Cell C after the completion of the restructuring.
In addition, an amount of R1.1 billion owed by Cell C to Comm Equipment Company will be deferred and repaid in equal monthly installments over 60 months.
TPC will buy Cell C prepaid airtime worth R1.2 billion (including VAT). In addition, TPC will purchase four quarterly airtime payments worth R300 million. TPC will raise R1.6 billion of the necessary funds from financial institutions, the settlement of which is to be repaid over a period of 24 months in equal monthly installments.
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