Digicel makes progess in debt reduction
Please see below an edited version of a statement from Digicel regarding the company’s debt reduction exercise.
Kingston – Communications and entertainment provider Digicel, which operates across 32 markets in the Caribbean, Central America and Asia Pacific, today announced that Digicel Group One Limited’s (“DGL1”) scheme of arrangement (the “Scheme”) is effective.
This announcement marks the conclusion of the last significant milestone in the comprehensive debt reduction process that Digicel announced on April 1, 2020 which followed extensive prior engagement with a number of large bondholders. The debt reduction process is expected to be complete next week, following consummation of the previously announced offers to exchange existing debt of Digicel Group Two Limited for various new securities.
Effective completion of the Scheme follows stakeholder support for the debt reduction process, including the sanctioning of the Scheme by the Bermuda Supreme Court on June 8, 2020 and the entry of an order by a federal United States court on June 17, 2020, recognising DGL1’s proceedings in Bermuda and giving full force and effect to the Scheme in the United States.
Key outcomes of the debt reduction measures include:
• reducing debt by approximately US$1.6 billion to approximately US$5.4 billion;
• reducing annual cash interest costs by US$125 million;
• extending key debt maturities; and
• enhancing liquidity and operational flexibility for continued growth and monetisation of Digicel’s well-invested infrastructure.
Denis O’Brien, chairman, Digicel, said: “We are very grateful for the support of our bondholders and other stakeholders in delivering a transformative outcome that underpins our ability to further enhance our services to our 13 million customers across 32 markets.”
“To date, Digicel has invested over US$7 billion providing state-of-the-art infrastructure in 32 markets, including over US$2.2 billion of this over the past five years.”
Jean Yves Charlier, chief executive, Digicel Group, said: “Whilst the deleveraging process has been underway over recent months, the day-to-day job of providing exceptional services, planning for the future and managing the human and logistical challenges posed by COVID-19, is being progressed by our . . . teams, colleagues and partners . . . .
“In light of the severe impact that COVID-19 has had on the global economy and in many of our markets, we anticipate a continuing impact on our revenue, at least through the remainder of calendar year 2020. We have implemented significant measures to help us mitigate a portion of the revenue impact through new cost savings initiatives and I would like to acknowledge our staff for agreeing to accept pay reductions during this period and similarly our board, for agreeing to suspend a proportion of their remuneration and fees for the year.
“COVID-19’s impact has been both positive and negative in the first fiscal quarter of FY21. We have seen increased demand for connectivity and content services. However, there has been pressure on mobile prepaid, roaming and in-store sales in the consumer segment, and the Tourism Sector, SME’s and Governments in our Business Solutions segment. Year-over-year, on a reported basis, we expect service revenues to be down by a high single-digit percentage in the first quarter of FY21.”
“Our Caribbean markets, including Jamaica and Trinidad have been most impacted by COVID-19 while Haiti and the Pacific markets, including Papua New Guinea have been the most resilient.”
“The last number of months have also seen us partnering with governments across our markets to ensure that people can stay connected as they work, learn and interact from home due to social distancing.” (PR)