Cell C ratings under review
Moody’s has placed the Caa1 Corporate Family Rating (CFR) of South African mobile services provider Cell C as well as the B3 senior secured notes due 2012 and the Caa3 senior subordinated notes due 2015, under review for possible upgrade.
The action follows the announcement on 27 May 2008 by Saudi Oger that it had offered to buy back dollar and euro bonds issued by Cell C, at 101% percent of face value.
The buyback offer has been triggered by Saudi Telecom buying a 35% equity stake in Oger Telecom (which indirectly owns 75% of Cell C), which is regarded as a change of control under the terms of the Cell C bonds.
Moody’s said that the decision to place Cell C’s ratings under review for possible upgrade reflects the possibility that bondholders would accept the offer of repurchase, thus reducing Cell’s currently high debt burden of R7.4bn of non-shareholder debt at December 2007.
"Moody’s will focus its review on the impact of the possible bond repurchase on Cell C’s financial position subsequent to the buyback, particularly with regard to its shareholders’ plans to recapitalise Cell C. The possible shareholder action (although legally required under Cell C’s bond indenture) also provides an indication of support for Cell C.
"Presently, Cell C is capitalised with about R6.2bn of bonds (that is the subject of the buyback), R0.8bn of finance lease debt, R0.4bn of local borrowings and R4.7bn of subordinated shareholder loans, making up R12.1bn in debt at December 2007," the rating agency said.
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