Blue Label Telecoms, the biggest shareholder in Cell C, has signed a non-binding term sheet (umbrella restructure term sheet) with potential funders, taking the recapitalisation of the financially-troubled operator a step closer.
The company, which has a 45% stake in Cell C, announced to shareholders today that the deal had been sealed with key stakeholders as part of the telco’s refinancing.
The debt-laden Cell C has been under pressure for some time, facing a myriad of problems, including declining revenues and debt management challenges.
Nonetheless, Blue Label announced in August that it had concluded a term sheet for an airtime purchase transaction with Investec, Rand Merchant Bank for the recapitalisation.
Today, Blue Label advised shareholders that funding may soon be on the way after signing the umbrella restructure term sheet.
The umbrella restructure term sheet sets out the general principles and is subject to the conclusion of all legal documentation and fulfilment of all conditions precedent.
Commenting on the development, Douglas Craigie Stevenson, Cell C CEO, says: “Restructuring the balance sheet and improving Cell C’s overall liquidity was part of the four-pillar strategy we put in place to turn the company into a profitable, competitive player in the South African telecoms industry.
“The other two pillars include improving operational efficiencies and implementing an innovative network strategy. We have made significant strides on the latter two. Our leadership team has been focused on implementing a strategy to ensure the company is a fit-for-purpose entity when the transaction concludes.
“The recapitalisation of this business is highly complex and it involves many stakeholders – we are grateful to our customers, employees and partners who have walked the road with us. We are excited about the future prospects and are poised to assume our competitive position in the market.”
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