Cell C turns to Blue Label, banks to refinance onerous debt

Cell C said it’s refinanced R1.4-billion of debt on better terms with loans from its biggest shareholder and a consortium of banks as the operator considers a listing in 2020.

South Africa’s third largest operator is also in talks with vendors including Huawei Technologies for an additional facility of R1.4-billion to fund capital expenditure, a company representative said by e-mail in response to questions.

Cell C emerged last year from a protracted debt restructuring rescue plan with Blue Label Telecoms taking a 45% stake. That restructuring reduced Cell C’s debt by two-thirds to less than R6-billion, but much of the remainder was still funded at onerous terms with interest rates as high as 17%.

Better terms and new financing will help Cell C improve its results, which have been burdened by high interest rate payments. In turn, those results have hit Blue Label Telecoms’ shares, which have dropped almost 70% since it took the stake in Cell C.

Cell C, which competes with MTN Group and Vodacom Group in South Africa, is planning to sell shares in Johannesburg by the first quarter of 2020 to fund acquisitions, CEO Jose Dos Santos said on 21 August.  — (c) 2018 Bloomberg LP