By Staff Writer
Tech firm Blue Label Telecoms announced on Monday that it has entered into a binding umbrella agreement to restructure Cell C’s debt.
The firm said it has entered into an agreement with Cell C, debt providers of Cell C, a third-party investor, and other relevant parties (which could be Net1).
The agreement will facilitate the reduction of the maximum net borrowings of Cell C to R6 billion.
As part of the agreement, the third-party investor is to subscribe for 15% of Cell C for R2 billion and Blue Label’s subscription for 45% of the share capital of Cell C remains unchanged.
The company said the binding restructure agreement is subject to the conclusion of the relevant transaction agreements, which are expected to be unconditional by no later than 30 June 2017.
Also read: Cell C eyes 2020 JSE listing
Cell C, South Africa’s third-largest mobile phone operator, is likely to be floated on the JSE in the next three to four years, according to a media report published on Sunday
The Sunday Times newspaper report said the country’s third-largest mobile phone operator plans to use the next three years to position itself for a favourable listing.
“We think the markets will still be trying over the next two or so years, but we will use this time to make sure we have changed perceptions about this company and to ensure that there is an appetite to buy Cell C from a customer and listing perspective,” Cell C CEO Jose Dos Santos, told the Sunday Times.
South Africa’s biggest fund manager, the Public Investment Corporation (PIC) told the newspaper that it would consider investing in Cell C if it decided to go ahead with a listing. The PIC is invested in the country’s tow biggest mobile phone operators, Vodacom and MTN.
Cell C is currently in a process of being recapitalised.
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.