Cell C’s empowerment partner CellSaf has called Blue Label Telecoms’ recapitalisation deal with Cell C “the most blatant attempt at corporate hijacking in recent history”.
Blue Label completed the recapitalisation of Cell C in August, making it a 45% shareholder of the operator through subsidiary The Prepaid Company.
The recapitalisation reduced Cell C’s net borrowings to under R6 billion.
It announced the deal in 2015, with a plan to buy a 35% stake in Cell C for R4 billion. In 2016, Blue Label announced it would take a 45% stake.
Blue Label would then hold 45% in Cell C, 3C Telecommunications 30%, Net1 15%, and Cell C management and staff 10%.
The 30% share of 3C Telecommunications is in turn held as 29.4% by the Employee Believe Trust, 45.6% by Oger Telecoms, and 25% by CellSaf.
The ownership of the company by South African shareholders has increased from 25% to over 86%, and the participation of historically-disadvantaged persons in Cell C increases from around 25% to over 30%, said the company.
CellSaf is not happy with the deal, however, and has taken the matter to the high court, the Competition Commission, and ICASA.
CellSaf’s Zwelakhe Mankazana told the City Press that the transaction is not a genuine recapitalisation of Cell C.
“Our view is that a number of organisations… will find themselves exposed to commercial and legal jeopardy by the time the deal unravels,” said Mankazana.
He alleged that Oger entered into a clandestine agreement in 2014 to sell shares in Cell C to Blue Label in exchange for cash advances for airtime.
He also bemoaned that “CellSaf will be loaded with R2.25 billion in additional debt, on top of an accumulated R4 billion in current debt, which 3C owes Oger Telecoms”.
Mankazana said CellSaf will not back down from its position.
Cell C denied the allegations and said CellSaf has presented the same baseless allegations on many media forums.