Digicel’s US$1.7-billion debt restructuring deal amounts to default: Moody’s

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Digicel’s US$1.7-billion debt restructuring deal amounts to default: Moody’s
Denis O’Brien
Denis O’Brien

(JAMAICA OBSERVER) — Moody’s, one of the world’s leading credit ratings agencies, is describing Digicel’s plan to wipe away as much as one quarter of its US$7-billion (€6.5bn) debt through restructuring as defaulting.

The Jamaica-based regional telecoms group, owned by Irish businessman Denis O’Brien, announced last month that it was asking holders of five classes of bonds to wipe away a total of US$1.7 billion of what they were owed by swapping their securities for notes of lesser value.

Digicel, which had been left with a high debt burden following years of declining earnings, said last week that most of the bondholders had signed up for the offer.

However, in a statement issued on Tuesday in New York, Moody’s argued that the debt exchange plan – which is still ongoing – if completed as proposed, “we will consider them as a distressed exchange, which is a default under Moody’s definition”.

In response, Digicel told the Jamaica Observer, “This exchange process arose from a consensual, collaborative process with bondholders that has secured overwhelming bondholder support to reduce Digicel debt by almost one quarter (US$1.7 billion), extend debt maturities, and reducing ongoing financing costs annually.

“It transforms Digicel’s balance sheet and its scope to continue monetising its well-invested network following four successive quarters of underlying mobile revenue growth.

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