Cell C could hand debt to special purpose vehicles - report

23 June 2017

Mergers, Acquisitions and Financial Results

South African operator Cell C is seeking to cut its debt by 73 percent as part of a deal to help it sell a stake to Blue Label Telecoms while retaining its operating licence, Bloomberg reported, citing two people familiar with the matter. The sources said Cell C would split about USD 688 million of borrowings into three special purpose vehicles. Alongside stake sales to Blue Label and payment services provider Net1 UEPS Technologies, the plan would cut the overall debt to ZAR 6 billion from about ZAR 22 billion, they said.

The special purpose vehicles will take on debt held by South Africa’s Nedbank Group, a group of Chinese lenders, and a USD 446 million bond issued by Cell C that matures in July 2018, the people said. In exchange, the vehicles will control a combined 30 percent stake in Cell C. The proposal is the latest attempt by Cell C to push through the sale of a 45 percent shareholding to Blue Label for ZAR 5.5 billion, a deal agreed in October after almost a year of talks.

According to the people, its being cast as a debt refinancing rather than a takeover as South African regulators may demand a licence reapplication in the event of a change of ownership. CellSAf, which is black-controlled and owns 25 percent of Cell C, argues that such a transaction would unfairly dilute its shareholding.

Source: Telecompaper