Africa-Press – South-Africa. Blue Label Telecom, which owns a 45% stake in Cell C, has announced a new deal to recapitalise the debt-ridden network operator, in an arrangement that has been described by its CEO as “highly complex”.Via a subsidiary, Blue Label will loan Cell C R1.46 billion to repay some of its secured lenders – which will receive 20c for every rand that they are owed. Cell C has a debt burden of around R7.3 billion.Some of Cell C’s lenders will convert their loans into shares in Cell C.
Blue Label will also buy Cell C’s pre-paid airtime for an amount of R1.2 billion, to help inject capital into the cellphone service provider.
Cell C chief executive, Douglas Craigie Stevenson, noted that the recapitalisation of the business is “highly complex and it involves many stakeholders”.
He described the latest development as taking the company closer to concluding a transaction to ensure that the operator is well placed to take advantage of strategic growth opportunities with the right capital structure. “Restructuring the balance sheet and improving Cell C’s overall liquidity was part of the four-pillar strategy we put in place to turn the company into a profitable, competitive player in the South African telecoms industry,” he said.”The other two pillars include improving operational efficiencies and implementing an innovative network strategy. We have made significant strides on the latter two.”Part of Cell C’s turnaround strategy which was implemented in March 2019 is focusing on operational efficiencies, reducing operational expenditure and optimising traffic. In May 2019, Blue Label wrote down the carrying value of its Cell C investment to zero, as the company sank deeper in crisis.
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