Cell C raised EUR400 million (R3.8 billion) on the European capital market to be used to repay certain debts. Originally it had planned to raise R5 billion this way.
This week, the cellular network operator said it had raised the money through a private offering of 8.625% first priority senior secured notes due 2012. Originally it had planned to have two tranches of bond offerings that would have consisted of seven- and 10-year notes.
However, bond market turmoil in May meant the market`s appetite for risk dwindled and Cell C had to settle for a smaller capital-raising exercise.
"Our ability to price our bonds at a rate we felt was attractive was a function of the appetite in the market, and we concluded in conjunction with Citigroup [the book-running manager], that a smaller offering stood a much better chance of pricing at an attractive level," says Jonathan Newman, special adviser to Cell C CEO Talaat Laham.
He says the money raised will be used to retire Cell C`s third-party credit facilities, vendor financing arrangement and export credit facilities.
"We are in discussions with lenders to raise additional bank credit on the back of the high yield offering. We have the flexibility to raise either secured senior debt or subordinated debt."
Newman says this fund-raising exercise has nothing to do with the CellSaf sale of 15% of 3C`s (Cell C`s holding company) shares to Saudi company El-Rashid Engineering and reducing the black empowerment component to 25%.
"That transaction has taken place at the shareholder level," he says.
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