Denis O’Brien’s Digicel raises debt sale to $1.24 billion

Denis O'Brien's Digicel, which is currently seeking to raise debt to refinance borrowings that fall due in the near term, has increased the amount it plans to raise by about 33 per cent to almost €1.24 billion in order to fund the early redemption of bonds that mature in 2020.

The group's Digicel International Finance Limited subsidiary, which owns assets across the Caribbean, signalled at the end of last month that it planned to raise $935 million in senior secured loans that are due to be repaid within the next five to seven years. This would allow the group to redeem its $856 million of existing secured loans, which are due to be repaid between March 2018 and March 2019.

However, the group decided on Monday to increase the amount of debt it is raising by $300 million. This will enable it to finance an early buyback of some $250 million of bonds that are due to mature in February 2020 and which carry an annual interest rate, or coupon, of 7 per cent, Digicel said in a statement.

Heavy debts

The heavily indebted company is also seeking to secure a $100 million revolving credit facility.

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The upsized fundraising would give the heavily-indebted additional financial headroom over the medium term, ahead of its next big debt maturity, when $2 billion of bonds fall due for repayment in late 2020.

The group is currently in the middle of its biggest-ever restructuring plan, which would see 1,500 staff, or a quarter of its workforce, leave the company by the middle of next year.

Fitch, one of the world's leading credit ratings agencies, estimates that Digicel will start generating cash again from the full year to March 2018 on the back of an expected rebound in earnings and lower investment demands. The group's free cash flow has been negative in recent years due to high capital expenditure for fibre network investments, according to Fitch.