End of an era as Denis O’Brien cedes control: Digicel $1.7bn debt restructuring nears completion this week

Tomorrow is likely to mark the end of an era for businessman Denis O’Brien, as control of his Digicel mobile empire formally passes over to his lenders.

A major restructuring deal at Digicel sees a consortium – led by PGIM, Contrarian Capital Management and GoldenTree Asset Management – secure a controlling stake in the company.

Last year Digicel announced that the telecoms entrepreneur, who founded the company in Jamaica in 2001, had agreed to cede his majority stake in the business in return for a debt write-down totalling $1.7bn.

The move will also see the company raise $110m via a rights issue.

Digicel had for years been struggling to tackle the debt, which at one stage hit a peak of $7bn.

The company completed a previous debt restructuring in 2020, which saw bondholders write off $1.6bn and Mr O’Brien inject $50m.

A new filing with the Securities and Exchange Commission says that new notes totalling $1.25bn are expected to be issued tomorrow.

That is likely to mark the end of the latest debt restructuring process.

Last November, the Supreme Court of Bermuda approved a scheme of arrangement for the firm.

While Mr O’Brien is for now remaining on the Digicel board, he also retains a 10pc stake in the business, as well as options over another 10pc.

However, the company recently appointed Rajeev Suri – the former CEO of telecoms company Inmarsat – as chairman, succeeding Mr O’Brien.

“As previously signalled, completion of Digicel’s consensual restructuring is expected in early 2024 and will reduce the group’s consolidated debt by approximately $1.7bn and its annual cash interest expense by approximately $120m,” said a Digicel spokesman.

In an interview last November with the Telecoms.com podcast, Mr O’Brien said he was looking forward to reducing his work schedule.

“Life goes on,” he said. “The main thing from my point of view is that I don’t have to work 12 to 14 hours a day anymore. I stepped down as chair to become non-executive. And that kind of suits me at my age to do that. To have a bit of fun.”

“We invested $5bn,” he said of Digicel. “We were borrowing money at 7pc to 7.5pc. It’s now 15pc because of what’s happened in Ukraine and interest rates and everything being locked down. Plus we lost $100m in revenue in Haiti because the local currency declined by 60pc.”

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