Having announced that they will be upgrading their credit rating of Digicel, international credit ratings agencies, Fitch and Moody’s have hinted that the revised rating might not be so favourable as expected.
This latest pending assessment comes as the Jamaican-based regional telecoms has struck a US$1.85 billion (€1.6 billion) deal to sell its Pacific unit to Australian telecommunications company Telstra Corporation Limited.
Fitch has indicated that the improved creditworthiness of Digicel will be limited as a result of its “aggressive” manoeuvres to restructure its debt pile twice in recent years.
It is also expected Digicel will look at the earliest opportunity to redeem what remains of a type of bond issued last year to certain creditors, as part of the debt restructuring — convertible into an almost half equity share in the company if they are not taken out by June 2023.
Some US$190 million of these bonds remain outstanding— equating to a potential 44 per cent stake after Digicel bought back some US$10 million of these notes late last year.
With US$250 million of the US$1.85 billion sale amount being subjected to Digicel meeting certain earnings targets in the coming years, it has been reported that Digicel plans to use most of the upfront proceeds to redeem its US$1.05 million of senior secured notes that would ordinarily fall due in 2024.
Most of Digicel’s US$425-million senior unsecured notes are set to mature in 2025.