Cell C recently announced a new restructuring plan, which will reduce net debt to R8 billion or less when implemented. The target is to reduce the debt further over the next year.<\/p>\n
As part of the deal, Blue Label Telecoms submitted a conditional binding offer to Cell C\u2019s board of directors.<\/p>\n
The deal will see Blue Label Telecoms contribute R4 billion<\/strong><\/a> in a subscription for approximately 35% of Cell C’s total issued share capital at the conclusion of the restructuring programme.<\/p>\n Management on behalf of the employees of Cell C have also submitted a binding offer to co-invest in the company with Cell C\u2019s current shareholder 3C Telecommunications, and Blue Label.<\/p>\n Cell C employees will ultimately hold around 30% of the total issued share capital in Cell C at a cost of R2.5 billion.<\/p>\n If successful, the restructuring will result in 3C Telecommunications holding 35%, management and staff 30%, and Blue Label 35% of Cell C’s ordinary shares.<\/p>\n Cell C\u2019s restructuring sheds light on the true enterprise value of the company.<\/p>\n The enterprise value is a measure of a company’s total value, which is used as a more comprehensive alternative to equity market capitalization.<\/p>\n Enterprise Value = market value of common stock + market value of preferred equity + market value of debt + minority interest – cash and investments<\/p><\/blockquote>\n In Cell C\u2019s case, the only relevant values are the market value of preferred equity, and the market value of debt. This leaves the equation:<\/p>\n Cell C\u2019s Enterprise Value = market value of equity + market value of debt<\/p><\/blockquote>\n Using Blue Label Telecoms\u2019s offer of R4 billion for 35% of Cell C\u2019s shares, it gives a market value of around R11.4 billion.<\/p>\n After the restructuring, the market value of debt will be around R8 billion, which means:<\/p>\n Cell C\u2019s Enterprise Value <\/strong>is\u00a0<\/strong>R11.4 billion + R8 billion = R19.4 billion<\/strong><\/p><\/blockquote>\nHow much Cell C is worth<\/h3>\n
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