Just over two years after a bunch of bondholders in Denis O’Brien-founded Digicel seized control of the telecoms group in a debt-for-equity swap, the company has made a few new appointments to the board.
One in particular – British finance executive Tony Bates – catches the eye. For Bates previously served as chief executive at UK satellite communications group, Inmarsat, where he reported to one Rajeev Suri, chief executive of the business between 2021 and 2023.
Suri has been chairman of Digicel since the debt restructuring that left O’Brien with only a 10 per cent stake in the business.
The Digicel board appointment press release highlighted that Bates worked closely with the former Inmarsat CEO “on business performance, capital structure and major transactions” – including the company’s sale to Viasat.
Could the two guys coming together again on the board of Digicel be an indicator that the bondholders – who were never going to hang around forever – are positioning for a sale?
A marked improvement in the group’s financial position in the past year bodes well. It returned to the bond markets last July for the first time since its debt restructuring, raising about $2.7 billion (€2.3 billion) of new secured debt to refinance its entire existing borrowings and establish a new $200 million revolving credit facility. Debt peaked at $7 billion six years ago.
Debt ratings agency Fitch estimated in a note late last year that Digicel – which is based in Jamaica and operates in 25 markets – is on track to post adjusted earnings before interest, tax, depreciation and amortisation of $720 million-$730 million for its current financial year to the end of March. That would mark a significant improvement from its out-turn of $680 million last year.
The improvement is expected to be driven by “single-digit” percentage growth in its fixed line and business-to-business operations, steady revenues from its mobile business and management keeping a close eye on costs.
O’Brien has remained on the board since the restructuring, with the minimum term due to conclude next January.
A sale of Digicel in the meantime would establish whether the warrants he received in the company at the time of the restructuring – entitling him to double his equity stake to 20 per cent, subject to it rebounding to an equity value of $1.1 billion – will come good.
