Digicel, the Caribbean telco owned by Denis O’Brien, has extended until midnight on Wednesday the deadline for holdout bondholders to accept a debt restructuring that will wipe out about $1.6 billion of its $7 billion debt pile.
The majority of the relevant noteholders have already accepted the restructuring to bring the company’s debts down to a more sustainable level of about $5.4 billion.
However, the owners of just 7 per cent of one class of Digicel bonds worth $925 million, and due in 2023, have signed up for the restructuring. About 90 per cent of another class of 2021 bonds have signed up.
The holdouts of these two bonds have another two days to accede the surrender of their bonds for new notes due in later years.
The company has already improved the initial terms offered to the holders of the $925 million in 2023 debt. The 2023 bonds are higher up the ranking order and enjoy greater protections than most of the other bonds subject to the distressed debt exchange.
Digicel originally offered to exchange the $925 million of 2023 bonds for notes due in 2027 that were worth 85 per cent of what was owed. The company said on April 29th that it is now offering as much as 95 cent on the dollar to the holdout investors.
The main reason this particular group is being targeted is to push out ultimate repayment dates, rather than impose major losses on them.
Enough bondholders of all other classes have already signed up to get the wider restructuring over the line.
The current debt negotiations come a little over a year after bondholders who were owed almost $3 billion agreed to postpone getting their money back by accepting longer-dated notes in exchange for their holdings.
Digicel, headquartered in Jamaica, operates across the region and also in the Pacific. Its racked up its debt in US dollars during a breakneck expansion, but it has struggled in recent years as its revenues were earned in local currencies, many of which struggled as the dollar strengthened.
Moody’s, one of the world’s leading credit ratings agencies, has said that Digicel’s plans to wipe away as much as one-quarter of its debt through the restructuring will amount to a default.
