Cell C creditors hire lawyers to push through rejected Telkom takeover

5 Dec 2019

Following the announcement that Telkom South Africa’s takeover bid for cash-strapped Cell C has been rejected, the latter company’s creditors remain keen to push through the transaction. According to Bloomberg, senior debt holders have hired investment banking firm Moelis & Co. and corporate lawyers Linklaters and DLA Piper to lobby for the Telkom proposal. People familiar with the matter told the news agency that the creditors are considering blocking Cell C from pursuing an alternative recapitalisation plan by forcing the stricken mobile operator into liquidation. Creditors are also requesting that Cell C’s board act independently from Blue Label Telecoms, which has owned 45% of the company since 2016, the sources indicated.

Telkom is keen to combine Cell C with its own mobile unit in order to better compete against the country’s dominant players Vodacom and MTN. However, Cell C’s favoured proposal is understood to be a transaction involving local investment company Buffet Group. Bloomberg notes that a takeover by Telkom would return around ZAR0.86 (USD0.06) for every ZAR1.00 owed, while the banks will have to ‘take a deeper haircut’ if Cell C goes ahead with the Buffet Group deal.

South Africa, Cell C, Telkom South Africa