Cell C announced that it has defaulted on the payment of interest on its $184-million (R2.7-billion) loan, which was due in December 2019.
The company also defaulted on interest and capital repayments related to bilateral loan facilities with Nedbank, China Development Bank, Development Bank of Southern Africa, and the Industrial and Commercial Bank of China – which were due in January 2020.
Blue Label – the mobile operator’s biggest shareholder – detailed the payment default in a statement to shareholders.
“Currently, none of the bilateral loan facilities have been accelerated as noteholders are aware and support that Cell C is committed to resolving the situation by agreeing to restructuring terms with its lenders while it also continues to work proactively with all stakeholders to improve its liquidity, debt profile, and long-term competitiveness,” Blue Label said.
Cell C released a statement saying that the company’s S&P Global status on certain loan facilities and senior secured bonds remains unchanged at D (Default).
“The suspension of payments is part of the wider Cell C initiatives to improve liquidity and to restructure the company’s balance sheet,” Cell C said.
The company added that it continues to work with all stakeholders to improve its liquidity, debt profile, and long-term competitiveness as part of its turnaround strategy.
Roaming agreement and turnaround strategy
Cell C went on to refer to its expanded roaming agreement with MTN, which it entered into in November 2019, stating that this would allow it to better control its capital expenditure and operating costs.
“This agreement will drive efficiencies in the delivery of services to consumers and supports South Africa’s policy goals of avoiding network duplication,” Cell C said.
It said the expanded roaming agreement paired with a recapitalisation transaction is part of Cell C’s turnaround strategy.
”Our turnaround strategy is to ensure operational efficiencies, restructure the balance sheet, implement a revised network strategy, and improve overall liquidity,” said Cell C CEO Douglas Craigie Stevenson.
“We continue to engage with all stakeholders throughout this process and believe we have made good progress.”