Cell C recapitalisation concluded

11 August 2017

Mergers, Acquisitions and Financial Results

Cell C’ recapitalisation has been concluded, reducing the company’s net debt to no more than R6-billion, including $184-million of bonds which are fully hedged into South African rand.

The recapitalisation was made possible by a subscription for shares from Blue Label Telecoms of R5,5-billion and a further subscription from Net1 for R2-billion. Former bond and debt holders supported the restructure of the debt in Cell C.

At the close of the transaction Blue Label Telecoms holds 45% in Cell C, 3C Telecommunications 30% (in turn held as 29.4% by the Employee Believe Trust, 45,6% by Oger Telecoms and 25% by broad-based black empowerment grouping CellSAf), Net1 15% and 10% on behalf of Cell C management and staff.

The ownership of the company by South African shareholders has increased from 25% to over 86% and the participation of historically disadvantaged persons in Cell C increases from around 25% to more than 30% at ownership level.

Cell C management and staff now have the opportunity for the first time to participate in the equity of the company, says Jose dos Santos, CEO of Cell C. “We are delighted to have concluded this two-year long process for the benefit of all our stakeholders.

“The recapitalisation provides a sustainable growth platform for Cell C that will promote healthy competition in the South African telecom market to further drive down costs and improve our value offerings.”

The recapitalisation also secures the employment of about 2 500 full-time employees of Cell C and a further 15 000 people that are employed in the industry value chain as a result of Cell C’s operational and commercial activities.

“If you include future substantial investments planned by Cell C, further economic stimulation will also flow from this recapitalisation,” Dos Santos adds.

“We would like to thank our incoming shareholders for their commitment to seeing through this long process and securing a healthy future for Cell C. Secondly, I would like to thank our longstanding shareholders in 3C Telecommunications for their support during this process and throughout Cell C’s history,” he adds.

Brett Levy, joint CEO of Blue Label, says: “This transaction is the most significant in Blue Label’s history and marks a milestone for the group’s strategy. As a supplier and distributor to Cell C, we have already identified multiple-synergies in the procurement chain, distribution network and provisioning of products and services.

“Along with Cell C’s quality management team, and its attractively valued and powerful assets, a recapitalised Cell C offers our shareholders compelling growth prospects, including the possibility of a separate stock exchange listing in future.”

Mark Levy, joint CEO of Blue Label, adds: “We are delighted to conclude this complex transaction and take this opportunity to formally welcome Cell C to the Blue Label family. Both management teams can look forward to working closely together in unlocking commercial synergies, as well as identifying opportunities to enhance operational and financial performances.

“We thank the vendors and the many other stakeholders involved in bringing the transaction to fruition.”

Blue Label’s commercial contracts with all other mobile networks remain unchanged.

Source: IT Online