JSE-listed Blue Label Telecoms said management remains optimistic that the planned recapitalisation of Cell C will be successful.
On 2 August 2017, Blue Label Telecoms, through its wholly-owned subsidiary, The Prepaid Company, acquired 45% of the issued share capital of Cell C for a purchase consideration of R5.5 billion.
As at 31 May 2019, Blue Label Telecoms investment in Cell C was impaired to nil. It remains at nil as at 31 May 2020.
Based on the following facts available, Blue label Telecoms informed investors on Thursday that management believes that Cell C will continue as a going concern for the foreseeable future.
Cell C concluded the national roaming agreement on 7 August 2019, which became effective on 4 May 2020. “This agreement is one of the key pillars in Cell C’s transformation plan as well as its long-term network strategy to optimise operating costs and reduce capital outlay as part of the turnaround strategy,” said Blue Label Telecoms.
“This agreement is anticipated to positively impact the cost base and future cash flows on the successful implementation of this transaction.”
Blue Label Telecoms said the board of Cell C established a liquidity committee to monitor the liquidity position of the company and to ensure that the business is not trading recklessly during the negotiations of the recapitalisation and debt restructuring.
“Although the liquidity position of Cell C remains challenging, Cell C has proven that it has managed to continue trading despite the liquidity concerns and management is confident that this committee will manage the liquidity position of Cell C until the conclusion of the recapitalisation process,” the company said.
Blue Label Telecoms also revealed that Cell C has appointed independent financial restructuring advisers to assist in stringent monitoring of liquidity as well as designing revised business plans that support its new operating business model.
Management remains optimistic that the planned recapitalisation of Cell C will be successful. The recapitalisation is important to improve the capital structure of the company and the deferral of repayments that will support the long-term sustainability of Cell C.”
Blue Label Telecoms further stated that stakeholders had appointed independent advisers to assist with the recapitalisation and debt restructuring process, and formal engagements are ongoing.
“Although no certainty exists around the successful implementation of the recapitalisation, management remains optimistic.”
