Cell C, which is 45% owned by JSE-listed Blue Label Telecoms, appears to be sinking deeper into trouble.

The struggling mobile operator has defaulted on the payment of interest on a $184 million (R2.7 billion) loan, which was due in December 2019, along with interest and capital repayments related to bilateral loan facilities with Nedbank, China Development Bank, the Development Bank of Southern Africa and the Industrial and Commercial Bank of China.

Blue Label shares were hard hit by the news, sending its shares 12.58% lower at R2.78 by 02:11 pm on Tuesday in Johannesburg bourse. The company and Net 1, which owns 15% of the mobile phone company, have written down the carrying value of their stakes in Cell C to zero.

“Currently, none of the bilateral loan facilities have been accelerated as noteholders are aware and support that Cell C is committed to resolving the situation by agreeing to restructuring terms with its lenders while it also continues to work proactively with all stakeholders to improve its liquidity, debt profile and long-term competitiveness,” Blue Label informed investors on Tuesday.

For more on Cell C’s woes: Read our exclusive stories here

In a statement Cell C said it’s S&P Global status on certain loan facilities and senior secured bonds remain unchanged at D (Default).

The suspension of payments is part of the wider Cell C initiatives to improve liquidity and to
restructure the company’s balance sheet, it added.

“Cell C continues to work proactively with all stakeholders to improve its liquidity, debt profile and long-term competitiveness as part of its turnaround strategy.”

As announced in November  2019), Cell C said it has entered into an extended roaming agreement with MTN, to better control its capital expenditure and operating costs. This agreement will drive efficiencies in the delivery of services to consumers and supports South Africa’s policy goals of avoiding network duplication. The expanded roaming agreement together with a recapitalisation transaction are part of Cell C’s turnaround strategy.

”Our turnaround strategy is to ensure operational efficiencies, restructure the balance sheet, implement a revised network strategy and improve overall liquidity,” Cell C CEO, Douglas Craigie Stevenson adds.

“We continue to engage with all stakeholders throughout this process and believe we have
made good progress.”

 

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