DECEMBER 13TH, 2019 – DECEMBER 20TH, 2019
Website: www.suntci.com
VOLUME 15 - NO. 49
Email: sun@suntci.com
Tel: (649) 348-6838
$1.00
Fax: (649) 941-3281
www.facebook.com/tcisun
DIGICEL BILLIONS IN DEBT by Hayden Boyce Publisher & Editor-in-Chief
T
he Digicel Group is facing a billion dollar debt crisis and has recently been downgraded by two of the world’s top ratings agencies, Fitch and Moody’s, The SUN can confirm. According to international reports, the Denis O’Brien-owned Digicel Group, the parent company of Digicel TCI, faces “imminent refinancing risk” and will have to restructure a large part of its almost $7 billion debt pile in the next 18 months. Reports quoted, Fitch, a global leader in credit ratings and research, which pushed its view on Digicel’s creditworthiness deeper into what is termed junk status. Last month, Fitch lowered its ratings on Digicel by one level to CC, which implies a “default of some kind appears probable”, according to the firm’s own definition. The rating is eight rungs below what Fitch deems to be an investible grade. “The most immediate concern is [Digicel’s] $1.3 billion notes maturing in April 2021, which Fitch believes the company will struggle to refinance amid stagnant operating performance,” the agency said. “Fitch expects that Digicel will have to restructure debt at multiple levels in the next 12-18 months, due to the group’s unsustainable capital structure and imminent refinancing risk.” Digicel’s bonds have tumbled in value this year amid mounting concerns about how sustainable the group’s debt mountain is following earnings declines in recent years. The company, set up by O’Brien in 2001, operates in 32 markets across the Caribbean, Central America and Asia Pacific regions. It has spent more than $5 billion developing its networks and business, which has 14 million subscribers. It is reported that O’Brien took $1.1 billion of dividends out of the group between 2013 and 2015. In January 2019, creditors holding almost $3 billion of Digicel bonds agreed to postpone getting their money back by accepting longer-dated notes in exchange for their holdings. This was described by credit ratings
Jameka Williams of South Caicos is 2019 Chop Off Champion
J
ameka Lashawn Williams, owner of Chilli’s Takeout is 2019 Chop Off Champion. TCI Chop off Cook off Challenge under the umbrella of TCI Food and Culture Festival
firms as a distressed debt exchange or restructuring. A few months ago, Moody’s, the ratings agency, downgraded Digicel and changed its outlook for the company to negative. The agency said the decision to downgrade its rating of the group reflected its view that “the risk of Digicel making another distressed exchange or debt restructuring within the next 12-18 months has increased, considering the still weak operating results and liquidity of the group.” It said the company “has continued to report declining earnings, negative free cash flow and increasing leverage”.
took place on Friday December Sharlene Cartwright- Robinson, 6th, at Ports of Call Court Yard in Jameka Lashawn Williams, Nikita Providenciales and hundreds of ‘Chef Nik’ Skippings host of the persons came out to cheer on their event and Turks and Caicos Islands favourite Chefs. Culinary Ambassador and His Pictured is Premier Hon. Excellency Governor Nigel Dakin.
“A return to sustained revenue and earnings growth has not materialised and any improvement to the company’s financial profile will only be very gradual, resulting in Digicel still facing high refinancing risk,” it was stated. According to Moody’s, Digicel’s liquidity remains overall weak, although the group improved its cash balance and debt maturity profile when it issued $600 million of senior secured notes at Digicel International Finance Limited in March. “However, as long as free cash flow remains negative, liquidity will weaken again,” the agency said. Another report said Digicel’s earning dipped in the three months to the
RESILIENCE
You Can Rely On www.fortistci.com | 649-946-4313
end of September. This, according to sources, was a due to a slump in the value of currencies in some of its main markets against the US dollar offset an underlying improvement in revenues. Earnings before interest, tax, depreciation and amortisation (Ebitda) declined by 1 per cent in the quarter, Digicel’s second fiscal quarter, to $250 million (€227 million), compared with the same period last year, sources said. While underlying revenues rose 4 per cent, they fell 1 per cent on a reported basis to $554 million, dragged down by a $26 million currencies hit.
Continued on page 2