Cell C’s creditors aren\u2019t giving up on a takeover offer from rival Telkom, which South Africa\u2019s third-largest mobile-network operator rejected last week.<\/p>\n
Senior debt holders have hired investment-banking firm Moelis & Co and corporate lawyers Linklaters LLP and DLA Piper LLP to lobby for the Telkom proposal, people familiar with the matter said.<\/p>\n
They could block Cell C from pursuing an alternative recapitalization plan by forcing the carrier into liquidation or business rescue, said the people, asking not to be identified because talks are ongoing.<\/p>\n
A takeover by Telkom would return about 86 cents on the rand to lenders, while banks may have to take a\u00a0haircut<\/span>\u00a0if Cell C goes ahead with a transaction involving local investment company\u00a0Buffet<\/span>\u00a0Group, they said.<\/p>\n Creditors are also requesting that Cell C\u2019s board act independently from Blue Label Telecoms<\/span> Ltd, the people said.<\/p>\n \u201cThe board is continuously approached by various parties and we remain focused on executing our turnaround strategy,\u201d Cell C said in an emailed response to questions.<\/p>\n \u201cIndependent financial and legal advisers have been appointed representing the lenders and constructive discussions on the recapitalization are underway with them and other stakeholders in respect of various proposals.\u201d<\/p>\n Linklaters, DLA Piper and Moelis & Co declined to comment, while Buffet<\/span>\u00a0Group could not be reached. Telkom said it hasn\u2019t had any further communication from Cell C\u2019s side.<\/p>\n It\u2019s not the first time Cell C has spurned advances from Telkom, which wants to combine the country\u2019s two smallest network operators to better compete against industry leaders MTN Group Ltd and Vodacom Group Ltd.<\/p>\n After running into financial difficulties in 2016, Cell C\u00a0opted<\/a>\u00a0for a deal with Blue Label, which now owns 45% of the company.<\/p>\n In July, Cell C missed interest payments and suspended future obligations, resulting in S&P Global Ratings cutting Cell C\u2019s\u00a0assessment<\/a>\u00a0to default.<\/p>\n The company, which generates about R15 billion ($1 billion) in revenue, is struggling to repay about R9 billion of debt.<\/p>\n \u201cThis restructuring involves confidential discussions with various stakeholders, including Cell C\u2019s board, shareholders, financiers and professional advisers,\u201d Cell C said on Monday.<\/p>\n \u201cWe acknowledge public interest in Cell C\u2019s restructure, however, we request confidentiality in the process and will update the market in due course.\u201d<\/p>\n Cell C agreed on an extended roaming agreement with MTN last month that will give it access to the network of South Africa\u2019s second-largest wireless carrier.<\/p>\n As part of that pact, Cell C will pay as much as R5 billion\u00a0 a year in roaming charges, from about R1.8 billion, the people said. Lenders haven\u2019t been given a chance to review the deal, they said.<\/p>\n
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