Blue Label Telecoms announced that Cell C’s budget restructuring is completed after three years of work.
The company said it has entered into long-term binding agreements with Cell C and various Cell C financial stakeholders, including certain Cell C shareholders and creditors.
All the conditions precedent to the agreements have been met.
“In mid-2019, Cell C has undertaken a trend reversal strategyfocusing on operational efficiency, reducing operational expenses and optimizing traffic, “said Blue Label
“This included moving from a capital-intensive build-and-own network model to an infrastructure-sharing model that provides variable operational expenses and is scalable.”
Blue Label said that, coupled with the recapitalization of its debt, the changes would lead to a significant improvement in liquidity and ensure the long-term sustainability of Cell C.
“The recapitalization was the last and fundamental pillar of Cell C’s turnaround strategy; deleveraging the balance sheet, providing liquidity to operate and putting the company on a long-term growth and sustainability trajectory, “said Douglas Craigie Stevenson, CEO of Cell C.
“We are immensely pleased and honored to have received the support of our many stakeholders, especially our shareholders, our infrastructure partners who have shown confidence in our new model, accepted the new business strategy and supported the turnaround vision and our customers for their patience “.
Craigie Stevenson said that after the recapitalization, Cell C’s debt will have shrunk significantly, allowing it to move forward and make the company leaner.
“We are in a good position to play in a market that is now made up of infrastructure buyers and sellers,” he said.
“Cell C is ready to invest to offer our customers great value, which has been a hallmark of our heritage for more than 21 years.”
Craigie Stevenson said Cell C could claim to have a quality network with access to over 8,775 sites, 96% of which are LTE-enabled as of late August 2022.
“In the short and medium term, our operational goal will be to complete the implementation of the network migration by the end of 2023 to reach 14,000 sites,” he said.
Cell C will also launch new products, especially on prepaid.
He said it will also launch “a new way of doing business” and the ability to make significant moves in the wholesale business.
“We have a clear path for our next trip. We will not be satisfied, because change is part of our DNA in Cell C and we believe we have the power to change your world. “
Blue Label said the transaction involves the injection of new money to restructure Cell C’s financial and operational liabilities and stabilize the company.
“To facilitate the restructuring of Cell C’s debt to certain guaranteed lenders for a total of Rand 7.3 billion (set in November 2019), Blue Label will provide liquidity through a guaranteed loan of Rand 1.46 billion”, he has declared.
“A portion of R1.03 billion of this debt financing will be used to pay the secured lenders under the accepted compromise offer of 20 cents for every R1 of debt.”
Secured lenders who choose to remain invested in Cell C will lend an amount equal to the 20 cents received from the compromise offer under a new loan agreement.
This new loan agreement will be interest-bearing, secured and give a face value of the aggregate principal equal to 2.75 times (or 55c) of the amount advanced.
“All lenders participating in the new loan will have the right to share pro rata temporis in a new issue of common stock in Cell C at par value,” Blue Label explained.
“All current shareholders will dilute proportionately to allow for this new issue of common stock.”
Blue Label’s subsidiary, The Prepaid Company, will hold 49.53% of Cell C’s shares after completing the restructuring.
An additional R1.1 billion cell C already owed to Comm Equipment Company, a wholly owned subsidiary of The Prepaid Company, will be deferred and repaid in equal monthly installations over 60 months.
The prepaid company also wants to buy Cell C prepaid airtime worth R1.2 billion.
In addition, it will make four quarterly payments to purchase airtime for R300 million (including VAT).
The first payment will take place at the beginning of the 13th month following the recapitalization of Cell C.
Together with other third parties, The Prepaid Company will purchase certain levels of shares from Cell C under an agreed monthly schedule or in line with market requirements.
The prepaid company will raise R1.6 billion of the funds requested by financial institutions, whose settlement will have to be repaid in 24 months in equal monthly installations.