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Digicel deal facing challenges

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(Jamaica Observer) DIGICEL’s proposed debt restructuring plan could face hurdles with some of its creditors reportedly not in agreement with the deal that was reached late last month.

Digicel on February 28, just a day ahead of when it was due to pay US$925 million in bonds, said it had reached an agreement with “an ad hoc group of crossover holders, holding approximately 50 per cent of the company’s debt” about a debt restructuring.

However, a report in the London-based Sunday Times newspaper, pointing to information coming out of Reorg, a credit intelligence firm, shows that Digicel is yet to win support from a key group of creditors.

“Two classes of creditors have signed a co-operation agreement to present a ‘united front’ against an agreement in principle signed by [Digicel Chairman Denis] O’Brien and a third class of creditors,” the Times report noted, quoting from Reorg.

The report also pointed out that holders of 57 per cent of term loans issued by Digicel International Finance Limited (DIFL) and 46 per cent of the DIFL secured note holders are not supportive of the agreement.

“The bloc could leave Digicel Limited creditors, who struck the deal with O’Brien, Digicel’s largest shareholder, short of the votes needed to push the planned reorganisation through a pre-pack chapter 11 or similar consensual-type restructuring. It is understood that the DIFL creditor group is looking for a higher coupon or interest rate on its debt. Discussions are said to be ongoing,” the report claimed.

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