Holdout investors tender US$4.4m and counting in Digicel bonds - Late debt exchange tally continues into 2021
Published:Wednesday | December 30, 2020 | 12:10 AMSteven Jackson/Senior Business Reporter
Caribbean retail investors have tendered millions of dollars’ worth of old US dollar-denoted bonds from Digicel, as part of a regional deal to give them a final chance to join other bondholders from around the world in a global debt exchange. Those regional investors were holders of specific debt issues involving the telecom’s DGL2 and DGL3 bonds. The two offers, held open late for Caribbean investors who were slow in participating in earlier global bond swaps, are now closed and Digicel has tallied the DGL2 surrenders, but won’t know the amount for late DGL3 bonds until next year.
“There were approximately US$4.4 million of DGL2 notes tendered to the trustee. The trustee is processing DGL3 tenders and it is likely to be early January before this is completed,” Antonia Graham, head of public relations at Digicel, said this week in response to Financial Gleaner queries.
Digicel became aware that some eligible Caribbean retail holders did not participate in a bond exchange offer spanning 2019 and 2020. The reduction in the principal was the main grouse of the holdout note holders, who expressed their grievance in the media. The new terms for DGL3 debt swap, for example, would see note holders receiving roughly US$260 rather than their US$1,000 original investment, as outlined by Digicel in a previous statement on the bond. However, the alternative for those who did not participate was the total loss of their principal.
As part of an attempt to maximise participation, Digicel extended the DGL2 offer on three occasions – September 30, 2020, to October 31, 2020; October 31, 2020, to November 15, 2020; and from November 15, 2020, to November 20, 2020. It closed the DGL3 offer in mid-December this year. The offers were for the exchange of the old Digicel notes for new ones.
In order to make an offer to eligible Caribbean retail holders for their outstanding notes, Digicel established a holding trust earlier this year.
Digicel refinanced four bonds this year. The telecoms extended the life of the bonds for two years at lower coupon rates, reducing the company’s debt load by US$1.6 billion to about US$5.4 billion in the process. Most bondholders accepted the refinancing terms, pushing back the maturity of the bonds, which will now be redeemed mostly in 2024 and one in 2025.