Blue Label, Cell C agree on a revised restructuring deal

28 Feb 2017

JSE-listed Blue Label Telecoms has reached a ‘binding umbrella restructure agreement’ with Cell C, its debt providers, an unnamed third-party investor and ‘other relevant parties’ paving the way for a major restructuring of the South African mobile operator. Blue Label said the deal is ‘subject to the conclusion of the relevant transaction agreements, expected to be unconditional by no later than 30 June 2017.’ Under the revised deal, Cell C’s net borrowings will be reduced to ZAR6 billion (USD463 million). The unnamed third-party investor (thought to be Net1 UEPS Technologies, as the company was mentioned in a prior press release to shareholders), will subscribe for 15% of Cell C’s share capital for ZAR2 billion, while Blue Label will buy 45% of the business for ZAR5.5 billion, as previously agreed. Cell C said the new deal sets out the framework and agrees the key principles by which the debt will be reduced through a combination of fresh equity injections and an exchange of Cell C debt for equity. The company said its customers could now ‘look forward to more innovation, value and exciting new products and services, which will be announced in the coming weeks.’

As previously reported by TeleGeography’s CommsUpdate, the two sides have been in discussions on the planned restructuring since December 2015. However, South African Black Economic Empowerment (BEE) entity CellSAf consortium, which holds a 25% stake in the parent company of mobile operator Cell C, filed a legal challenge against the cellco’s planned restructuring in November 2016, claiming that it wasn’t afforded an option to comment on the restructuring plan. Cell C is wholly owned by holding company 3C Telecommunications, which is itself owned by Oger Telecom South Africa (60%), CellSAf consortium (25%) and Lanun Securities (15%). Following the conclusion of the deal, 3C Telecommunications (CellSAf and Oger Telecom) will hold 30% of the cellco’s equity, Blue Label will own 45%, while Cell C’s staff and management will be in charge of the remaining 25%.

South Africa, Blue Label Telecoms, Cell C, Oger Telecom