(CMR) According to the Irish Times Digicel has decided to abandon its plans to get its bondholders to write off almost $2 billion of debt yesterday of its $7-billion-plus debt pile during a statement that it was terminating its offer to holders of the 2023 bonds.
This comes shortly after it was disclosed that Digicel was saddled with an unsustained debt pile of over $7 billion and had to disclose its fiscal position to the SEC. The documents revealed that Digicel's CEO, Denis O'Brien, who took dividends of at least $1.9 billion between 2007 and 2015 continued to receive over $130 million in revenues, fees, and expenses over the past 3.5 years despite the company's debt restructuring issues.
The documents reveal that the Jamaican based company paid O'Brien's engineering services company Actavo $83.1 million during that period to install a fiber-optic network and maintenance. The amount of mark-up on this is unknown. It also paid $28.3 million for O'Brien's use of his private jet and $3.9 in annual rent for the Kingston, Jamaica headquarters. His Island Capital and Communicorp companies were also paid fees and expenses.
Digicel Group filed for Chapter 15 bankruptcy protection last week and had now abandoned its attempts to get five categories of debt holders to write off $1.7 billion in the groups debt restructuring plan. Apparently, the response to the deal was lackluster with less than 8 percent showing any interest.
Eventually seeing a write-off as impossible it sought to have the bondholders hold off for an additional two years past the 2023 payback period. With only 7.2 percent of its creditors agreeing they have instead terminating the offer on the 2023 bonds.
Another four categories of bondholders accepted plans for large write-offs as opposed to the less lucrative option of insolvent liquidation.
Digicel has operations in 32 countries across the Caribbean, Asia Pacific and Central America and had a combined net loss of almost $700 million in the 3½ years to September 2019. It is said that”
“The debt restructuring, involving bondholders accepting securities of a lesser value, represented a “superior” outcome for creditors to other options considered, including an insolvent liquidation, according to the documents.”
Part of the restructuring means that a new company called Digicel Group 0.5 Limited will be formed; owning group assets in the Caribbean, Asia Pacific and Central American regions. Several other holding companies including Digicel Group One Limited (DGL1) would be wound up and have appointed provisional liquidators in Bermuda. KPMG Ireland was appointed to value assets of DGL1. The company's unsecured bondholders faced a dismal loss.