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Fitch rating agency will cease rating Digicel’s debt levels in the wake of the telecoms’ reorganisation, including a new chairman and chief executive, and change in ownership control.
Digicel Group Limited, a provider of internet, cable and phone services across 30 markets, was recently taken over by its creditors after failing to meet its debt obligations. Founder and former chairman Denis O’Brien became a minority owner under the restructuring and gave up the chair, but remains on the board.
“These actions follow the group’s January 29th announcement of its completed consensual restructuring plan. Fitch has withdrawn the ratings due to commercial reasons,” the rating agency said of its decision on Tuesday.
“Following the withdrawal of ratings for Digicel, Fitch will no longer be providing the associated environmental social governance (ESG) relevance scores,” it said.
Digicel was US$4.7 billion in debt at the time of the restructuring, but the deal with its creditors has cut those obligations down to US$3 billion.
In January, three private equity firms acquired majority control of Digicel Group and appointed technology guru Rajeev Suri as chairman.
The overseas investors are PGIM, led by principal Gregory Cass; GoldenTree by partner Pat Dyson; and Contrarian Capital Management by Managing Director Xiao Song.
The investors were once bondholders who converted the funds they were owed into shares. In Jamaica, some small investors who hold Digicel bonds, via financial institutions, have complained that they got back fractions on the dollar. They were also not offered an opportunity to invest as shareholders.
Fitch, in December, estimated that the debt reduction would cut Digicel’s leverage from 8.5 times core earnings to 5.4 times, based on projections that the group will earn a US$550-million profit before interest tax, depreciation and amortisation in 2024.
Fitch Ratings has withdrawn the default ratings for Digicel International Finance Limited, Digicel Group Holdings Limited and Digicel Limited; the ratings for DGHL’s senior unsecured notes and subordinated notes, which were rated ‘C’/’RR4’ and ‘C’/’RR6’, respectively, prior to the withdrawal; and the ratings for DIFL’s subordinated notes, unsecured notes, and secured notes and term loan B facility due 2024, which were rated ‘C’/’RR6’, ‘C’/’RR4’, and ‘C’/’RR4’, respectively. DIFL, DGHL, and Digicel Limited were rated at ‘RD’ prior to the withdrawal.
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