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Denis O Brien's Digicel in bond issue

Thursday, September 06 08:31:17

Denis O Brien's mobile phone company Digicel has announced plans for a $700 million (E555 million) refinancing of its bonds. Bermuda-registered Digicel Group Ltd (DGL) plans to launch a private placement of $700 million of senior notes that would be due in 2020.

Part of the net proceeds will be used to repurchase the entire tranche of DGL's senior payment-in-kind (Pik) notes that are due in 2015. The amount outstanding on these notes is $415 million. DGL will also repurchase up to $245 million of the 8.875 per cent senior notes due in 2015 via tender offers. According to a note from ratings agency Moody's, about $1 billion currently remains outstanding on these notes.

The funds will also be used to pay any related fees and expenses, including applicable tender premiums and accrued interest on the notes. Moody's yesterday affirmed Digicel's corporate family rating and probability of default at B2. It also maintained its "stable rating outlook". It said the transaction was beneficial to DGL due to the elimination of the Pik notes from the capital structure and the extension of the 2015 debt maturities, as well as the lower interest that will attach to the new bonds.