JSE-listed telecoms specialist Blue Label Telecoms continues to hold talks with Cell C on a proposed recapitalisation of SA’s third-largest cellular services provider, the telco informed investors on Friday. By Gugu Lourie
Last month, Business Day reported that a empowerment shareholder at debt-laden cellular services group Cell C is looking to disrupt a much-needed recapitalisation exercise initiated by Blue Label Telecoms.
The newspaper reported that CellSAf, which holds an effective 25% stake in Cell C, has filed an application in the Gauteng High Court to liquidate 3C Telecommunications, the holding company for Cell C.
The liquidation application comes after CellSAf was seemingly not consulted on the Blue Label Telecoms recapitalisation deal.
Business Day also reported last month that 3C Telecommunications has dismissed efforts by CellSAF to disrupt a proposed recapitalisation exercise spearheaded by Blue Label Telecoms.
“Shareholders are hereby advised that negotiations regarding Blue Label’s participation in the recapitalisation of Cell C are ongoing, which, if successfully concluded, may have a material impact on the price at which Blue Label shares trade on the JSE Limited,” Blue Label Telecoms said on Friday.
“Shareholders are advised to continue exercising caution when dealing in their shares until a further announcement is made.”
The Blue Label Telecoms proposals to recapitalise Cell C had already been approved by the boards of 3C Telecommunications and Cell C on December 29.
In December, Blue Label Telecoms announced that it is planning to buy 35% of Cell C.
The transaction would see Blue Label Telecoms inject R4 billion in a subscription for 35% of Cell C’s total issued share capital at the conclusion of Cell C’s recapitalization programme.
The mobile phone operator said the recapitalisation programme will reduce Cell C’s net debt from the high double-digit numbers to a very manageable maximum of R8 billion or less when implemented.
The target is to reduce the debt further over the next 12 months.
The management on behalf of the employees of Cell C has also submitted a binding offer to co-invest in the mobile phone operator with Cell C’s current shareholder, 3C Telecommunications and Blue Label. Cell C employees will then hold around 30% of the total issued share capital in Cell C at a cost of R2.5 billion at the conclusion of the restructuring programme.
If the recapitalisation programe is successful, 3C Telecommunications will hold 35% of Cell C, Management and staff 30% and Blue Label 35% of the ordinary shares in the company.