Blue Label closes the deal to try to save cell C

Blue Label Telecoms has announced that Cell C’s balance sheet restructuring has completed after three years of operation.

The company said it has entered into long-term binding agreements with Cell C and several of Cell C’s financial stakeholders, including some of Cell C’s shareholders and creditors.

All previous terms of the agreements have been met.

In the middle of 2019, Cell C embarked on a transformation strategyfocus on operational efficiencies, reducing operating expenses, and improving traffic,” Blue Label stated

“This included moving from a capital-intensive build-and-own network model to an infrastructure sharing model that provides variable and scalable operating expenses.”

Blue Label said that along with the recapitalization of its debt, the changes would significantly improve liquidity and ensure the long-term sustainability of Cell C.

“Recapitalization was the final and critical pillar of the C-Cell transformation strategy; shrinking the balance sheet, providing liquidity to the business, and setting the company on a path to long-term growth and sustainability,” said Douglas Craigie Stephenson, CEO of Cell C.

“We are very pleased and humbled that we have received support from many of our stakeholders, particularly our shareholders and infrastructure partners who have shown faith in our new model, procured the new business strategy and supported the transformation vision and our customers for their patience.”

Craig Stephenson said that after the recapitalization, the debt of the C-cell would be significantly reduced, allowing it to move forward and making the company more streamlined.

“We are well positioned to play in a market that is now made up of infrastructure buyers and sellers,” he said.

“Cell C is ready to invest in delivering great value to our customers – which has been a hallmark of our legacy for more than 21 years.”

Craigie Stephenson said Cell C can claim to have a high-quality network with access to more than 8,775 locations, 96% of which are LTE enabled as of the end of August 2022.

“In the short to medium term, our operational focus will be to finish implementing the network migration by the end of 2023 to bring us to 14,000 locations,” he stated.

Cell C will also launch new products, especially on prepaid.

He said it would also launch a “new way of doing business” and be able to make important strides in the wholesale trade.

“We have a clear path for our next flight. We will not settle, because change is part of our DNA in the C cell, and we believe we have the power to change your world.”

Douglas Craigie Stephenson, CEO, Cell C

Blue Label said the deal includes an infusion of new funds to restructure Cell C’s financial and operating obligations and stabilize the company.

To facilitate the restructuring of Cell C debt owed to certain secured lenders totaling 7.3 billion rand (constant as of November 2019), Blue Label will provide liquidity through a secured loan of 1.46 billion rand.

“A portion of the debt financing of 1.03 billion rand will be used to repay the secured lenders according to the accepted average offer of 20 cents per R1 of debt.”

Secured lenders who choose to continue investing in cell C will lend an amount equal to 20c received from the settlement offer under a new loan arrangement.

This new loan arrangement will be advantageous and secured and give the total nominal value of the principal equal to 2.75 times (or 55c) of the amount offered.

“All lenders participating in the new loan will be entitled to participate pro rata in a new issue of cell C common stock at a nominal value,” Blue Label explained.

“All existing shareholders will be diluted pro rata to allow this new issue of common stock to be issued.”

Blue Label’s subsidiary, Blue Label’s prepaid subsidiary, will own 49.53% of the shares in Cell C after completing the restructuring.

An additional C cell of 1.1 billion rand already owes Comm Equipment Company – a wholly owned subsidiary of The Prepaid Company – and will be deferred and repaid in equal monthly installments over 60 months.

The prepaid company will also buy the 1.2 billion rand prepaid Cell C credit.

In addition, you will make four quarterly payments to purchase broadcasts for 300 million rand (including VAT).

The first payment will be at the beginning of the thirteenth month after the recapitalization of cell C.

In combination with other third parties, the prepaid company will purchase certain levels of inventory from cell C based on an agreed monthly schedule, or in line with market requirements.

The prepaid company will raise 1.6 billion rand from the requested funds from the financial institutions, which will be repaid over 24 months in equal monthly instalments.

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