Afrigather Blue Label Telecoms, the bulk shareholder of South African cell community operator Cell C, has announced that it has concluded binding long-form agreements with Cell C and varied Cell C monetary stakeholders for the recapitalization of the corporate.
The recapitalization of Cell C shall be within the type of new cash to restructure Cell C’s monetary and operational liabilities and stabilise the corporate.
In response to Blue Label, Cell C launched into a turnaround technique in mid-2019, specializing in operational efficiencies, decreasing operational expenditure, and optimising visitors. This technique included a transfer away from a capital-intensive build-and-own community mannequin to a scalable infrastructure sharing mannequin that gives variable operational expenditure.
The recapitalization of the corporate, along with the recapitalisation of its present debt which stands at R7.3 billion (~$414 million), will end in a major enchancment of liquidity and make sure the long-term sustainability of Cell C, Blue Label acknowledged.
“Day 1 publish recap Cell C may have achieved a major discount within the debt of the enterprise to allow us to maneuver ahead and make the enterprise extra streamlined as a brand new, reinvigorated, and fit-for-purpose entity to compete within the dynamic and altering telco panorama. We’re well-placed to play in a market that’s now made up of infrastructure patrons and sellers,” mentioned Douglas Craigie Stevenson, Cell C CEO.
To service the corporate’s debt, Blue Label along with different debt suppliers will present liquidity by way of a secured mortgage of R1.46-billion. R1.03-billion of this debt funding shall be used to pay out the secured lenders as per the accepted compromise offer of 20c for each R1 of debt.
Moreover, an quantity of R1.1-billion owed by Cell C to Comm Gear Firm (an entirely owned subsidiary of The Pay as you go Firm (TPC), which is a subsidiary of Blue Label Telecoms) shall be deferred and repaid in equal month-to-month instalments over 60 months.
Almost about financing Cell C’s working capital necessities, TPC has dedicated to buying Cell C pay as you go airtime to the worth of R1.2-billion. TPC may also buy 4 quarterly funds of airtime to the worth of R300 million (together with VAT). The primary fee shall be at the start of the thirteenth month following the recapitalisation of Cell C.
TPC, with contribution from different financiers, may also buy sure ranges of inventory from Cell C primarily based on an agreed month-to-month schedule or in keeping with market necessities.
The recapitalization course of couldn’t have come at a greater time for Cell C which has been bleeding cash because of operational deficiencies brought on by its heavy debt load.
With an purpose to quickly launch a 5G network after buying R288 million value of spectrum on the ICASA auction in March, the community is seeking to actively compete in South Africa’s intense 5G royal rumble.
