Telecommunications major the Digicel Group Ltd has announced that it has set a goal of raising another US$700 million of debt financing through a private bond placement that becomes due in 2020.
The company owned by Irish billionaire Denis O’Brien said the proceeds will finance the repurchase or early redemption of all the 9.125 per cent and 9.875 per cent toggle notes due to mature in 2015; and up to US$245 million of an 8.875 per cent bond also due in 2015.
Citigroup Global Markets Inc will serve as the dealer manager for the tender offer. Moody’s assigned a Caa1 to rating to the new issue and affirms Digicel’s B2 credit rating, after the announcement of the planned new issue.
Fitch Ratings has assigned a ‘B-/RR5(exp)’ rating to the 2020 senior notes. Securities rated ‘RR5’ have below average recovery prospects, the rating agency said. Fitch cited positives for Digicel as a strong operating performance, diversified revenue, market strength, and brand recognition, but said the credit quality of the Jamaican-based telecom whose operations spans 32 markets, was “tempered by continued high leverage, medium term refinancing risk, and exposure of operations to low rated countries.” Fitch said the recent acquisitions of Voila in Haiti and the transaction with America Movil—the El Salvador leg is pending regulatory approval—is expected to strengthen the Digicel’s competitive position in its top markets of Jamaica and Haiti.
Digicel posted annual earnings of over US$1 billion for the year ending March 31, 2012, the first time it surpassed the billion dollar mark since it launched in the year 2000. Revenue was up 14 per cent last year and customer numbers hit 12.8 million by the end of March.