Cell C lenders vote to take 80% loss on their debt to save company

Cell C’s secured lenders, who formerly held publicly listed bonds or notes, have voted in favour of a compromise cash-out offer of 20c for every R1 of debt.

The mobile operator said this marks a critical milestone in its financial restructuring and recapitalisation.

Cell C has not been able to pay its debts. It is not expected to survive if the recapitalisation fails.

The company has to restructure R7.3 billion in debt.

Of this, $184,002,000 (R2.95 billion) is First Priority Senior Secured Notes that Cell C issued and were publicly listed.

These noteholders had to vote whether to accept the haircut.

At least 75% of votes controlled by debtors with first-priority secured notes must approve the deal to be binding on all noteholders.

The noteholder meeting was held today after being delayed due to a lack of quorum on 20 June.

Cell C owner Blue Label Telecoms announced to shareholders that noteholders voted in favour of the compromise cash-out offer, amongst other things.

It said the final stages of Cell C’s overall recapitalisation transaction are being implemented. Blue Label said it expects the transaction to proceed to final close in late July 2022.

The final steps to concluding the overall transaction involve signing conditions precedent and long-form agreements. This is expected to be concluded in a matter of weeks, stated Blue Label.

“This is a significant step in the overall process to deleverage Cell C’s balance sheet,” said Cell C CEO Douglas Craigie Stevenson.

“It shows confidence in our new business strategy and with the overall debt reduced and simplified; we are set to compete as a sustainable entity going forward.”

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Cell C lenders vote to take 80% loss on their debt to save company