The worse may just be over for Cell C.
Lenders to the troubled mobile operator have approved a “compromise offer” that will place the company into a more sustainable debt position and able to compete more effectively in South Africa’s mobile industry.
“Cell C’s secured lenders, who formerly held publicly listed bonds or notes, have voted with the requisite quorum and majority in favour of the compromise cash out offer of 20c for every R1 of debt,” the company said in a statement on Tuesday afternoon.
The development “marks a critical milestone in the financial restructuring and recapitalisation” of Cell C, the company said.
The listed notes that were subject to Tuesday’s vote – a total of US$184-million, or just over R3-billion at the time of writing – are a portion of Cell C’s overall debt of R7.3-billion owed to secured lenders.
“This is a significant step in the overall process of deleveraging 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,” said CEO Douglas Craigie Stevenson said in the statement.
The final steps to concluding the overall transaction involve the signing of conditions precedent and long-form agreements. This should happen in the coming weeks.
Shares in Blue Label Telecoms, Cell C’s largest shareholder, were trading almost 4% higher on Tuesday afternoon at R6.80 each – a 52-week high.