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Troubled Caribbean and Pacific operator Digicel will emerge from its debt reduction process this week after winning huge support from its lenders.
The company, owned by Irish businessman Denis O’Brien and based in Kingston, Jamaica, won 97% support from holders of US$937 million worth of notes and 99% support from holders of notes worth US$993 million.
The move will reduce Digicel’s debt from US$7 billion to US$5.4 billion, said the company. This will reduce its annual interest payments by around $125 million.
Full details of the offer were kept confidential, and – as Digicel’s shares are not listed in any stock exchange – there is little information about the performance of the company.
The process has been fast. The company filed for bankruptcy protection in late May, saying its debt was unsustainable. According to filings in New York at the time, it had US$7.4 billion in outstanding debt, with revenues for the year ending March 2020 just US$2.3 billion and operating profit only US$479 million.
Digicel has continued in business throughout the process.
KPMG was appointed provisional liquidators in case the process failed. According to a May report in the Irish Times KPMG calculated that “a firesale of its assets” would raise US$484 million to US$629 million.
Filings showed a combined net loss of almost US$700 million in the three and a half years to September 2019.
In its boilerplate paragraph at the foot of the announcement Digicel notes that its total investment in the 18 years since O’Brien set it up has been US$7 billion – about equivalent to its total debt before the latest arrangements.
The company has services in 32 markets in the Caribbean, Central America and some Pacific islands.
Meanwhile, in a small but significant victory in the same week, a French court has ordered Orange to pay Digicel €181.5m (US$91.6 million) in damages and €68m (US$76.5 million) in interest because of the French group’s anti-competitive practices in the first decade of the century. Orange had already set aside €346 million (US$389 million) in an escrow account after losing the initial case in 2017 – about €100 million (US$112 million) more than it will actually pay after this week’s ruling.
Orange told Irish public broadcaster RTÉ that it might appeal against the decision to France’s Cour de Cassation, its supreme court.
The case relates to Orange’s activities in the French Caribbean territories – fully parts of the French state – of Martinique, Guadeloupe and French Guiana. Orange signed agreements with independent distributors and repair shops, to the exclusion of rivals such as Digicel.
SOURCE: CAPACITY MEDIA/PACNEWS
Pacific Islands News Association
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