Cell C plans to raise as much as $464 million from the sale of two bonds as part of the South African mobile-phone company\u2019s recapitalisation that will enable Blue Label Telecoms to buy a stake, according to two people familiar with the matter.<\/p>\n
The country\u2019s third-largest wireless carrier will sell $184 million of three-year senior secured bonds and $280 million of five-year securities, according to the people, who asked not to be identified as the plans aren\u2019t public. Both notes will pay a coupon of 8.625%, according to the people.<\/p>\n
Cell C spokespeople didn\u2019t immediately respond to emails requesting comment.<\/p>\n
The bonds will be used to repay Cell C\u2019s existing 400 million-euro ($465 million) of debt due to mature in July 2018, the people said. That will enable Dubai-based parent company Oger Telecom, which is owed most of the outstanding debt though affiliates, to exit the company and ease the completion of the reorganization that will see Johannesburg-based Blue Label take a stake, according to the people.<\/p>\n
The planned bond issues are expected to help the wireless carrier complete the transaction with Blue Label almost two years after talks began. The agreement to sell a 45% stake for R5.5 billion ($421 million) will initially reduce Cell C\u2019s debt by 73% without having to re-apply for an operating license, people familiar with the matter said last month.<\/p>\n
Blue Label\u2019s shares rose as much as 1.3 percent before paring gains to trade 0.8% up at R16.64 as of 3:57 p.m. in Johannesburg. The stock has dropped 8.6% this year, giving the company a market value of R11.2 billion.<\/p>\n