Digicel confirms sale of 450 Caribbean towers as debts mount
Digicel has confirmed reports that it is selling 450 towers across the Caribbean – but not the reported price, or that it plans to sell more assets over coming months.
The Irish Times reported yesterday that Digicel, which is 100% owned by Irish businessman Denis O’Brien, plans to raise $500 million over the next nine months via asset sales.
But bondholders have told the company that it needs to pay back $1 billion in debt by the end of March 2019. And a further $2 billion worth of bonds will mature in September 2020, say reports.
A spokeswoman for Digicel told Capacity: “We have signed a sale and leaseback agreement for 450 towers in the Caribbean and the deal is expected to close at the end of Q2 of this fiscal year. We will not be giving any other details at this time.”
This is standard procedure for Digicel, which pulled out of a plan to sell shares on the New York Stock Exchange in 2015. That would have raised $2 billion, but potential investors disagreed with O’Brien’s valuation.
As a result, the company gives almost no information about its financial performance, except to bondholders. Its website says: “As a privately held company, we only make financial information available to authorised institutions.” The site provides an enquiry form for institutional investors.
The Irish Times is one of the few sources of information – perhaps spurred by the fact that O’Brien is also an owner in Ireland’s media industry, with rival daily and Sunday newspapers in his portfolio.
The paper reported that “the company told debt analysts and bond investors on a call this week that it plans to complete the sale and leaseback of 450 wireless communications towers across the Caribbean by the end of September, and there is also mounting speculation that the group could sell its business in Panama.”
It says Digicel received “about $180,000 a tower for the sale of 215 mobile sites in the French West Indies earlier this year to Florida-based Phoenix Tower International”. It calculates that the sale of 450 towers would raise $81 million.
Bondholders were told that EBITDA for the year ending 31 March was “just over $1 billion”, a reported 2% down on the previous year. Net debt is 6.7 times EBIDTA, said the newspaper, and it needs to reduce this to 5.7 times by 31 March 2019, it said, citing bondholders. That implies it needs to pay back $1 billion in debt.
Further away, bonds worth $2 billion mature in September 2020. But the value of the notes has fallen to 77.5¢ on the dollar from 100¢ on the dollar earlier this year, said the paper, quoting a New York-based analyst who refused to be named. O’Brien is also involved in the Caribbean Deep Blue Cable initiative.