Digicel T&T is not in financial trouble and no restructuring of the company is contemplated at this point in time.
That’s the response from the company’s corporate communications manager, Penny Gomez, who told the Sunday Business Guardian, that Digicel’s Caribbean operations remain solid and intact.
Digicel has been in the news recently with an article in the Irish Times raising concerns about its financial stability and doubts on the operations of Digicel and its future prospects in the region. It also predicted that the company will soon return to the market with another restructuring plan.
However, Digicel’s executives are seeking to reassure investors and partners that the company’s future remains solid, especially in Caribbean.
In an emailed response, Gomez insisted that restructuring was not on the cards. She said: “The company is not holding any restructuring discussions.”
The Irish Times claims that, ‘Six months after Digicel issued about US$2.9 billion (€2.6 billion) of new bonds—a deal that effectively pushed out debt repayments and with reported earnings falling by nine per cent in the first quarter of 2019 to $210 million, its much-hoped-for return to earnings growth had not materialised.
“Following four months of negotiations, Digicel saw 98 per cent of the holders of $2 billion of bonds due for repayment in 2020 agree in January to postpone getting their money back from the group in 2020, by swapping their holdings for notes that mature in 2022.
“Almost all of the investors in a separate $1 billion of 2022 debt agreed to exchange their notes for new 2024 bonds. Almost $2 billion of the new bonds that were issued stand at the back of the queue to be repaid if the wider Digicel Group, which has some $6.7 billion of borrowings, runs into financial trouble in the future.
“Investors buying into the riskiest 2022 bonds are currently demanding a market interest rate, or yield, of 71 per cent, with the notes changing hands at a little under 23 cent on the dollar with the 2024 bonds not faring much better, yielding 61 per cent. The Irish Times reported.
But Gomez countered the article saying: “The exchange offer that concluded in January allowed the Group to extend the maturity of $2.9bn of debt by two years, in line with the Group’s strategy of proactively managing its upcoming maturities.”
She said: “These refinancing activities are not expected to impact on the operations of the group.”
So does this mean the business prospects in the region are diminishing?
Gomez said that the operations in T&T continued to perform in line with the company’s expectations.
Ratings agency Moody’s moved on July 12 to downgrade its ratings on the company, saying, “The risk of Digicel making another distressed exchange or debt restructuring within the next 12-18 months has increased, considering the still-weak operating results and liquidity of the group.”
So will the company make adjustments to its business model in attempt to shift the outlook?
Gomez said the company was always adapting.
“As we strive to provide the best for our customers there will be continual refinements to the business model to reflect changing customer needs and behaviours and technological advances to ensure that we continue to deliver a superior experience and better value for our customers,” she said.
Gomez is seeking to allay fears on the company’s future prospects in the Caribbean, saying they were committed to their corporate investments and identity in the region.
She added, “Digicel continues to be a leading provider of communications services in the Caribbean and, as we journey towards becoming a digital lifestyle partner for our customers, we are committed to continuing to provide a superior experience and better value for our retail, corporate and government customers across mobile, business solutions, home and entertainment and other related products and services.”
Denis O’Brien established Digicel in Jamaica in 2001, bringing it into 31 markets while taking on $6.8bn in debt.