S&P Global released a report today downgrading Cell C to D (Default), while its rating of Cell C’s senior secured bonds are now rated at Default (D).
There is “an increased likelihood that Cell C will be unable to repay all or substantially all of the obligations as they come due, unless it is able to restructure its debt and recapitalize its balance sheet,” S&P said in a statement on Thursday.
In response to the downgrade, Cell C said the suspension of interest payments in July is part of its wider initiatives to improve liquidity and to restructure the company’s balance sheet.
“Cell C continues to work proactively with all stakeholders to improve its liquidity, debt profile and long-term competitiveness as part of its strategic roadmap,” the company said.
Cell C added that it has entered into a term sheet to expand the provisions of its roaming agreement with MTN, to better control its capital expenditure and operating costs.
“An agreement will lay the groundwork for a broader national roaming agreement, supporting South Africa’s policy goals of avoiding network duplication,” Cell C said.
“The network services provided will drive efficiencies in the delivery of services to its consumers by Cell C.”
The company added that its expanded roaming agreement together with the recapitalisation transaction will help it to achieve sustainability.
“We are committed to simplifying the business model, right-sizing and optimising the business,” Cell C CEO Douglas Craigie Stevenson said.
“We have engaged with S&P throughout this process and believe we are on the right track with the transactions currently being finalised.”