The planned date for Cell C's recapitalisation has come and gone, but the telco says the restructuring is still in the works.
"The recapitalisation process is ongoing. Further updates will follow when appropriate," was all Cell C would divulge to ITWeb on the changes that include a R4 billion buy-in from Blue Label Telecoms.
Cell C announced its recapitalisation plans on 10 December 2015, with the expected effective date for the restructuring set down for 1 June 2016. However, so far no changes have been made.
The deal would see JSE-listed Blue Label Telecoms invest R4 billion to gain approximately 35% of Cell C's total issued share capital. The restructuring would also see Cell C employees gain 30% of the telco at a cost of R2.5 billion, while Cell C's holding company, 3C Telecommunications, would hold the last 35%.
On Monday, Blue Label renewed a previous cautionary announcement on SENS confirming its participation in the recapitalisation of Cell C was also ongoing.
A spanner in the works could be a legal challenge from Cell C's black economic empowerment (BEE) partner, CellSAf. In March, CellSAf filed papers in the South Gauteng High Court in an attempt to begin a liquidation of 3C Telecommunications. It reportedly claims 3C Telecommunications is financially and commercially insolvent, and unable to pay its debts.
At the time, Cell C's major shareholder, Oger Telecom, said the application had no merit and was being "vigorously opposed" by 3C Telecommunications.
"We believe the application not only has no merit, but is also frivolous, vexatious and an abuse of court processes," Oger's chief legal officer and deputy CEO, Mazen Abou Chakra, previously told ITWeb.
Currently, Cell C is 100% owned by 3C Telecommunications, which in turn is 60% owned by Oger Telecom South Africa, a division of Saudi Oger; 25%-owned by CellSAf; and 15% by Lanun Securities SA, which is a subsidiary of Saudi Oger.
If successful, the restructuring will result in 3C Telecommunications' stake in Cell C being reduced to 35%, which would leave CellSAf owning just 9% of that 35%.
Both the boards of 3C Telecommunications and Cell C approved the recapitalisation of the company on 29 December 2015. Chakra says the recapitalisation will significantly improve Cell C's sustainability and enhance the company's empowerment credentials.
Last year, Cell C said the proposed restructuring of the company's capital would see it reduce its net debt from what it said was "in the high double-digit numbers" to a "very manageable maximum of R8 billion or less", with plans to further reduce the debt over the next 12 months.
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