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Cell C completes recapitalisation thanks to R1.46 billion Blue Label loan

  • Cell C began its turnaround strategy under new executives in mid-2019.
  • An estimated R1.03 billion in debt funding will be used to pay secured lenders.
  • The Prepaid Company, a Blue Label subsidiary, will hold 49.53 percent of shares in Cell C.

In the middle of 2019 Cell C embarked on a turnaround strategy for the telecommunications company under new CEO Douglas Craigie Stevenson. That journey to date has proved a difficult one, with the largest problem facing Cell C being its debt.

As of November 2019, totalled debt owed to secured lenders sat at R7.3 billion and it is still a burden the company is working to alleviate itself of. To that end, Cell C announced this morning that it has completed its recapitalisation, which sees a sizeable liquidity loan of R1.46 billion being secured from Blue Label Telecoms.

The recapitalisation was the final and critical pillar of Cell C’s turnaround strategy; deleveraging the balance sheet, providing liquidity to operate, and putting the company on a trajectory of growth and long-term sustainability,” noted Stevenson in a press release sent to Hypertext.

“We are immensely pleased and humbled to have received the support of our many stakeholders, in particular our shareholders, our infrastructure partners who showed belief in our new model, bought into the new business strategy and supported the vision of the turnaround and our customers for their patience,” he added. 

Unpacking some of the key elements regarding this recapitalisation, it explains that a portion of R1.03 billion of the debt funding will be used to pay out the secured lenders. This according to an accepted compromise offer of 20c for every R1 of debt. 

Added to this, The Prepaid Company (TPC), a Blue Label subsidiary, will hold 49.53 percent of shares in Cell C after completion of the restructuring. Furthermore an amount of R1.1 billion owed by Cell C to Comm Equipment Company, a wholly owned subsidiary of TPC, will be deferred and repaid in equal monthly instalments over 60 months.

There is still a lot of work to be done before Cell C is in the green again, but the recapitalisation has seemingly buoyed the organisation regarding the future.

To further detail what lies ahead, the telecommunications company confirmed that it will Cell hold a market update on Thursday 29th September, as well as and host a roadshow starting from 3rd October.

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