Black Immigrant Daily News
Digicel Limited (DL and, together with its subsidiaries, the company) has announced it has reached an agreement in principle with a committee of its creditors regarding the key terms of a transaction (the Proposed Transaction) to comprehensively reduce the company’s debt and remains in ongoing discussions to negotiate definitive documentation.
Since shortly after the completion of the sale of Digicel Pacific in July 2022, the company has been actively engaged with its key creditors.
“While parties initially sought solely to extend the maturity of the DL 6.750 per cent Senior Notes due March 1, 2023 (the notes), the deteriorating and unprecedented situation in Haiti since September 2022 led the company to shift its focus to a more holistic solution for the company’s capital structure,” Digicel said in a press release Tuesday evening announcing the transaction.
“Accordingly, discussions have since focused on a comprehensive transaction. The company and an ad hoc group of crossover holders (the AHG), holding approximately 50 per cent of the company debt (as defined below) have subsequently reached an agreement in principle on the key terms of the Proposed Transaction that comprehensively addresses the company’s debt and ensures business continuity and uninterrupted service to customers,” the release said.
The AHG are material debt holders of the company, owning approximately 78 per cent of the DL Notes and approximately 58 per cent of Digicel International Finance Limited’s (DIFL) Subordinated Notes due 2026, approximately 64 per cent of the DIFL Unsecured Notes due 2025, approximately 39 per cent of the DIFL Secured Notes due 2024 and approximately 35 per cent of the DIFL Term Loans due 2024 (such indebtedness collectively, the Company Debt), and approximately 41 per cent in aggregate of Digicel Group Holdings Limited’s (DGHL and together with its subsidiaries, the Group) Senior Unsecured notes due 2025 and DGHL’s Perpetual Convertible Notes.
“The Proposed Transaction is subject to definitive documentation and other requirements, as applicable, and there can be no assurances that it will be consummated.
“The Proposed Transaction would, if and when consummated, reduce the Group’s consolidated debt by approximately US$1.8 billion and reduce its annual cash interest by approximately US$110 million while ensuring sufficient cash to fund operations and invest in key growth areas,” said the release from Digicel.
Digicel’s founder Denis O’Brien has endorsed the Proposed Transaction as a positive outcome for the business. O’Brien would remain actively involved in the business as a director and retain an equity interest in the recapitalised business.
The company continues to engage in productive negotiations with holders regarding the Proposed Transaction, including, among others, with additional holders of the DIFL secured indebtedness.
While no definitive agreement concerning the material terms of the Proposed Transaction has been reached and “no assurances can be provided that an agreement will be reached, based on momentum to date and agreement in principle on key terms”, the company believes a consensual and comprehensive restructuring is achievable.
The Notes Consent Solicitation
“DL has received the requisite consents from holders of the Notes to effect certain proposed amendments (the Proposed Amendments) to the indenture (the Indenture) governing the Notes.
“The Proposed Amendments provide for a 30-day grace period, which will automatically be extended to 90 days if DL enters into a restructuring support agreement with holders of at least a majority of the outstanding Notes during such 30-day period, before a default in the payment of interest, certain additional amounts, principal or premium with respect to the Notes constitutes an ‘Event of Default’, as defined in the Indenture.
“The consent solicitation expired at 5:00pm, New York City time, on February 27, 2023 (the Expiration Date). DL has been advised by Epiq Corporate Restructuring, LLC, the information and tabulation agent for the consent solicitation, that as of the Expiration Date, consents were validly delivered and not validly revoked in respect of approximately 88 per cent in aggregate principal amount of the Notes.
“As a result, DL, the guarantors of the Notes and Deutsche Bank Trust Company Americas, as trustee, entered into a supplemental indenture dated as of February 27, 2023, implementing the Proposed Amendments.”
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