Beleaguered South African operator Cell C has had a reprieve after a vote in which some lenders have agreed to take an 80% loss on their debt.
As readers may remember, this noteholder meeting was delayed after it was deemed inquorate; it was to have been held on 20 June. After it finally went ahead this week tech website MyBroadband reported that Cell C’s secured lenders, who formerly held publicly listed bonds or notes, voted in favour of a compromise cash-out offer of 20c for every rand of debt.
However, Cell C’s financial problems are not over yet. The company has to restructure R7.3 billion (about US$434.2 million) in debt. Of this, $184 million is First Priority Senior Secured Notes that Cell C issued and were publicly listed.
However, the vote has been described as “a critical milestone” in Cell C’s attempts to restructure the company’s finances.
Cell C CEO Douglas Craigie Stevenson, quoted in a number of news outlets, said: “This is a significant step in the overall process to deleverage Cell C’s balance sheet. It shows confidence in our new business strategy and, with the overall debt reduced and simplified, we are set to compete as a sustainable entity going forward.”
The company's major shareholder is Blue Label Telecoms, a company that sells innovative technology for mobile commerce to emerging markets in South Africa and abroad. It has said that it now expects the recapitalisation process to be finalised by late July.
Part of the reason for the appeal to lenders has been that Cell C has not been able to pay its debts. It now has some breathing space. However, if the recapitalisation fails it may not survive.