Cell C’s credit rating downgraded to “default” by S&P Global

Cell C has been dealt yet another worrying blow to its ever worsening financial situation by S&P Global yesterday.

The ratings agency announced that it had decided to downgrade Cell C’s credit rating to D or default. The reason for this is that Cell C failed to make interest payments in July of this year.

S&P Global said that the likelihood that Cell C will fail to pay all or a substantial portion of its obligations is high unless it restructures its debit and recapitalises its balance sheet.

Cell C, for its part, says that the “suspension of interest payments in July is part of the wider Cell C initiatives to improve liquidity and to restructure the company’s balance sheet.”

The company also appears to be pinning its hopes on a roaming agreement with MTN saying that this will lead to better control of spending and operating costs.

“The expanded roaming agreement together with the recapitalisation transaction will advance Cell C’s path to sustainability,” the network operator said.

Newly appointed chief executive officer at Cell C, Douglas Craigie Stevenson, appears confident Cell C can turn this situation around.

“We are committed to simplifying the business model, right-sizing and optimising the business. We have engaged with S&P throughout this process and believe we are on the right track with the transactions currently being finalised,” Stevenson said in a statement.

Earlier this year Stevenson (who was still interim CEO at the time) outlined plans to improve Cell C’s financial health. A number of steps that would optimise the business we’re outlined and one does have to wonder how that process is shaping up especially with this latest downgrade.

Right now however it appears as if Cell C’s future is in a state of flux and we hope it can turn the situation around.

[Via – Fin24]

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