Johannesburg - Cell C is seeking to cut its debt by 73 percent as part of a
deal that will help
The proposed transaction will see Cell C split about 9 billion rand ($688 million) of borrowings into three special purpose vehicles, said the people, who asked not to be identified because the talks are private.
Alongside stake sales to Blue Label and payment services provider Net1 UEPS Technologies, the plan will cut the overall debt to 6 billion rand from about 22 billion rand, they said.
The special purpose vehicles will take on debt held by
Read also: BlueLabel deal with Cell C debtors
The proposal is the latest attempt by Cell C to push through the sale of a 45 percent shareholding to Johannesburg-based Blue Label for 5.5 billion rand, a deal agreed in October after almost a year of talks.
It’s being cast as a debt refinancing rather than a takeover as South African regulators may demand a license reapplication in the event of a change of ownership, the people said. CellSAf, which is black controlled and owns 25 percent of Cell C, argues that such a transaction would unfairly dilute its shareholding and goes against South
African initiatives to distribute wealth to people discriminated
against during apartheid. Blue Label shares rose 0.2 percent to 15.14 rand at
10.08 a.m. in
One of the SPVs will be held by CellSAf, according to the proposal. However, the shareholder hasn’t been officially informed and hasn’t authorized the creation of any SPVs to hold shares in Cell C, one of the people said.
Another SPV will be controlled by 3C, the Oger Telecom controlled entity that previously controlled Cell C and wants to exit the company. An employee ownership scheme will own the third, according to the terms of the proposal.
“We have not announced any detail regarding the SPV structure,” Michael Campbell, Blue Label’s head of investor relations, said in an emailed response to questions. “Further particulars will be included in the circular to be released later in June.” Cell C declined to comment.
Some of the Cell C debt will be owed by the SPVs and will be secured by shares in Cell-C, the Net1 board said in emailed response to questions, without providing further details.
Under the new terms of the transaction, Net1 will take a 15 percent stake in Cell C in exchange for taking over 2 billion rand of debt. Other major Cell C shareholders will include the company’s management, led by Chief Executive Officer Jose Dos Santos, according to a circular sent to Blue Label shareholders. The CEO didn’t respond to phone calls seeking comment.
In February, Cell C rejected an attempt by Pretoria-based Telkom SA SOC Ltd. to gatecrash the talks with a $1 billion offer. A spokeswoman for Nedbank declined to comment. A phone call to Oger’s head office wasn’t answered.