Blue Label's Cell C recapitalisation reaches finalisation

2017-06-19 18:48 - Kyle Venktess, Fin24
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Mark Levy, Blue Label CEO

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Johannesburg - The prolonged recapitalisation deal between airtime seller, Blue Label Telecoms to acquire a 45% share in Cell C is expected to be finalised and implemented by August 1. 

In a Stock Exchange News Statement, the board of directors of Blue Label announced that it has signed the final equity transaction agreements to the recapitalisation of Cell C.

According to the circular released net borrowings of Cell C were reduced to a maximum of R6.0bn, down from R8bn previously. 

Blue Label subscription remains unchanged at 45% of Cell C for a subscription price of R5.5bn with Blue Label agreeing to provide liquidity support, to the extent required, in the form of interest bearing subordinated loans of up to $60m to a special purpose vehicle set up to hold shares in Cell C.

“The Cell C recapitalisation is anticipated to be implemented during the first week of August 2017 as it is subject to Blue Label Shareholder approval in a general meeting,” the statement read. 

The finalisation of the deal comes after Blue Label has reached the deal to acquire the shares in Cell C, in February Cell C is set to enter a deal with Blue Label amid growing debt obligations.

Cell C was recently downgraded to a ‘D’ credit rating by ratings firm Standard & Poor’s - the lowest junk status rating for a corporate company - shortly after withdrawing a bond placement, previously stating it could reduce its maximum net borrowings to less than R8bn through planned restructuring.

Cell C is South Africa's third largest mobile network with approximately 24m subscribers.

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