JOHANNESBURG - Telecommunications group Blue Label Telecoms is selling its Blue Label Mobile, or VAS operations and prepaid unit ThePrepaid Company to DNI 4PL Contracts for close to R1billion to settle its debts.
In a SENS announcement late yesterday, Blue Label, which releases its financial results for the year to May today, said it intended to deleverage debt built up through investments.
The group, which said it had consistently generated positive cash flows from its trading operations since its listing had strained its working capital requirements through dividend distributions, share buy-backs and investing activities.
“Over the past two years significant investments were made, necessitating an increase in interest bearing debt in order to ensure that the group’s working capital requirements continued to be met. Accordingly, the Blue Label board of directors have made a decision to deleverage the business in order to ensure a more robust and liquid balance sheet going forward,” the group said.
The Blue Label Mobile Group is being disposed off for R544 million plus an additional R100m, which shall be paid dependent on Mobile network operator subsidiary Cell C, padding a liquidity and solvency test. The price consideration payable by DNI to Blue Label in respect of the deal is R350 million.