Millicom takes full ownership of Tigo Guatemala for $2.2bn
Millicom is to acquire the remaining 45% equity interest in its joint venture businesses in Guatemala (Tigo Guatemala) for $2.2 billion in cash.
The agreement was signed Friday 12 November and is expected to close the same day. Once completed, Millicom will own a 100% equity interest in Tigo Guatemala and the deal is expected to accretive to Millicom’s cash flow and net income, increasing the company's equity free cash flow by approximately $200 million before incremental financing costs.
“We are delighted to have signed this agreement to consolidate a 100% ownership position in Tigo Guatemala, one of our most successful businesses," said Mauricio Ramos (pictured), CEO of Millicom.
"The transaction is right in line with our stated inorganic capital allocation strategy, which includes the acquisition of the remaining minority interests owned by third parties in our operations, when those transactions can be executed in an accretive manner.”
Millicom will leverage bridge financing to fund the transaction, provided by a group of unnamed 'leading international banks'. The company intends to refinance the bridge by issuing approximately $1.5 billion in new long-term debt, and approximately $750 million of new equity in Q1 2022.
With the transaction and the planned equity offering, Millicom’s leverage is expected to be approximately 3.1x in Q1 2022 and to continue to decline thereafter towards the company’s leverage target of 2x.
“We thank our partners for their important role developing Tigo Guatemala and for the support for this transaction. For Millicom, this new investment reflects our continued confidence in the thriving economy of Guatemala and our renewed commitment to the digital transformation of its society," added Ramos.
"Hand in hand with the vision and strong commitment of our team of more than 3,100 employees in the country, we will continue to build the digital highways that connect people, improve lives, and develop communities all throughout Guatemala. With this transaction, we will transform the financial profile of Millicom, significantly increase our cash flow and net income and greatly simplify our structure.”
In related news, July saw Millicom pledged $250 million to support its modernisation and expansion plans across Panama.