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Cell C completes financing plan

Paul Vecchiatto
By Paul Vecchiatto, ITWeb Cape Town correspondent
Cape Town, 16 Sept 2005

Cellular network operator Cell C has entered into a three-year R500 million revolving credit facility with Nedbank.

This completes a financing plan for the smallest of the country`s three network operators that includes the issuing of two tranches of high-yield bonds to overseas investors worth a total of R5.6 billion.

Jonathan Newman, advisor to Cell C chairman Talaat Lahman, previously said this revolving credit facility with Nedbank was part of the plan to restructure the company`s debt and position itself for future projects. The main purpose of this facility is to help with operational expenditure.

A corporate finance analyst at another major commercial bank says the financing structure has helped Cell C put its previous debts in order in a manageable format.

"However, the group remains heavily geared and will have to do a lot of work to meet its bond repayment obligations. This means it will have to expand its subscriber base or start finding other revenue streams," he says.

Cell C is still to announce the signing of its joint venture with UK group Virgin in which Virgin will operate as a virtual network operator.

"Our successful high-yield bond issues and the conclusion of this significant facility with Nedbank demonstrate our sound financial position and strong growth prospects," says Muhieddine Ghalayini, Cell C`s CFO.

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