Cell C reaches “important stage” in recapitalisation plan, says CFO Zaf Mahomed
The telco’s lenders have voted in favour of a compromised cash out offer to help deleverage the balance sheet.
On Tuesday, 5 July, Cell C lenders voted in favour of a compromised cash out offer of 20 cents for every R1 of debt.
The telecommunications company’s CFO Zaf Mahomed says that this is a critical milestone in the financial restructuring and recapitalisation of Cell C. “Cell C’s recapitalisation process has been a complex exercise and we are happy to have reached this important stage of the transition.”
Over the past two years Cell C has been working on a cash injection plan for the operator after it faced significant liquidity challenges that saw Blue Label, which owns a 45 percent stake in the telco, write down the carrying value of its Cell C investment to zero. The company currently has debt of around R7.3 billion.
He explains that the vote is an important step to deleverage the balance sheet of the company and ensure there is a manageable level of debt going forward. “Our turnaround strategy had four pillars – managing the liquidity and ensuring a successful recapitalisation are the final pieces of this journey to create the path to long-term sustainability.”
As part of the recapitalisation plan, some of Cell C’s lenders will convert their loans into shares in the business, and Blue Label will buy Cell C’s prepaid airtime for an amount of R1.2 billion to help inject capital into the telco.
Zaf adds that the final steps to concluding this transaction involve the signing of long form agreements giving effect to the recapitalisation. “We expect to have this concluded over the coming weeks.”
“These major milestones provide momentum to unlock Cell C’s business transformation.”