Cell C defaults on loans of $184 million
JOHANNESBURG - Blue Label yesterday notified its shareholders that troubled Cell C had defaulted on its loans.
The JSE-listed telecoms group, which holds 45percent of Cell C, said the country’s third-largest mobile telecoms provider had failed to make payments of capital on its $184million (R3.16billion) note, which was due on Sunday, and interest and capital repayments related to the respective bilateral loan facilities between Cell C and Nedbank, the China Development Bank Corporation, the Development Bank of Southern Africa and the Industrial and Commercial Bank of China, which were due in January and last month.
Blue Label said note holders were aware that Cell C was working on its liquidity crisis.
“Currently, none of the bilateral loan facilities has been accelerated, as note holders are aware, and support that Cell C is committed to resolving the situation by agreeing to restructure terms with its lenders while it also continues to work pro-actively with all stakeholders to improve its liquidity, debt profile and long-term competitiveness,” said Blue Label.
Cell C said the loan defaults came as no surprise, because its informal debt was at a standstill until its recapitalisation programme was finalised.
“Cell C continues to work pro-actively with all stakeholders to improve its liquidity, debt profile and long-term competitiveness as part of its turnaround strategy,” the company said.
Cell C said its turnaround strategy was focused on ensuring operational efficiencies, restructuring its balance sheet, implementing a revised network strategy and improving overall liquidity.
“While a new recapitalisation is being negotiated, there is an informal debt standstill and debt payments have been suspended,” said the company.
It said that although Cell C’s lenders were entitled to call up the entire debt owed, they had not accelerated debt payments and had 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 company said its S&P Global status on certain loan facilities and senior secured bonds remained unchanged at D (default).
Ofentse Dazela, director of pricing research at Africa Analysis, said the default showed that the company’s expanded roaming agreement with MTN, which was touted as some sort of panacea, had not yielded the intended results.
Dazela said the operator continued to navigate a challenging environment and questions about its sustainability were becoming more pronounced by the minute.