Cell C has announced that it is still unable to make debt repayments – which includes amounts due for certain loans and senior secured bonds.
“Cell C’s S&P Global status on certain loan facilities and senior secured bonds remains unchanged at D (Default),” the company said in a statement released on Tuesday.
The company previously acknowledged it had defaulted on the payment of interest on a $184-million (R2.7-billion) loan, which was due in December 2019.
It has 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.
Cell C said although lenders are entitled to call up the debt owed, they have not accelerated debt payments and have held off on taking action in order to facilitate a commercial solution.
“The non-payment is not a surprise to lenders that understand the Cell C turnaround strategy,” the operator said.
Good progress on turnaround strategy
Cell C faces a total debt of R9 billion and announced that it has entered into a consultation process to retrench up to 960 employees.
It is currently undertaking a turnaround strategy which aims to improve its liquidity, debt profile, and long-term competitiveness.
“The turnaround strategy is focused on ensuring operational efficiencies, restructuring the balance sheet, implementing a revised network strategy and improving overall liquidity,” the company said.
It has implemented an informal debt standstill and suspension of debt repayments as part of recapitalisation negotiations.
“Good progress in a complex recapitalisation is being made. Discussions to seek alignment among all stakeholders are being held and term sheets will need to be concluded,” the company said.
The focused company strategy and correctly capitalised balance sheet will lead to better leveraging of assets, it added.
“There is belief in Cell C’s long-term prospects, and the new leadership team is focused on the journey to turn the company into a profitable, innovative player in the local telecoms industry and is confident the organisation will overcome its challenges,” Cell C CEO Douglas Craigie Stevenson said.