Johannesburg - Mobile network Cell C has withdrawn a bond placement as the company says it can reduce its maximum net borrowings to less than R8bn through planned restructuring.
Johannesburg Stock Exchange listed mobile services company Blue Label Telecoms [JSE:BLU], which is currently in the process of acquiring a 45% stake in South Africa’s third largest mobile network for R5.5bn.
Blue Label released a market update on Tuesday to shareholders stating that Cell C's bond placement – which had been a condition of the transaction – had been withdrawn.
The bond placement process was expected to reduce Cell C's existing net borrowings to R8bn.
“Blue Label has been informed by Cell C that the bond placement has been withdrawn and that the maximum net borrowings is anticipated to be achieved without the necessity to do so via a bond placement,” the statement by the company read.
In a circular published by Blue Label in October to shareholders, it was revealed that Cell C posted a profit of just R2.8m for the six months ended June 30 2016.
This compares to a loss of R1.15bn for the period ended June 30 2015.
The financial statements reveal that Cell C recorded revenues of R6.96bn for the half-year period ended June 30 2016, compared to just over R6bn for the previous comparable interim period.
Meanwhile, the Blue Label circular revealed that Cell C posted a net loss of R5.6bn for year ended December 31 2015 with revenues of R13.2bn for that year.
Blue Label had previously planned to acquire 35% of Cell C for R4bn, however Net 1 UEPS Technologies[JSE:NT1] subscribed to 118 million Blue Label shares for R2bn, meaning Net1 now has a 15% stake in Blue Label.
Management and staff of Cell C will also subscribe for 25% of the issued capital.
Meanwhile, 3C Telecommunications is set to hold the remaining 30% of the total issued share capital.
The deal and recapitalisation of Cell C is expected to be concluded on November 18 and reduce the mobile network’s debt to R8bn.
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