Houlihan Lokey acts as co-financial advisor with Rand Merchant Bank (RMB) to Cell C’s largest shareholder Blue Label Telecoms (“BLT”) (and The Prepaid Company (“TPC”) as the wholly owned subsidiary of BLT) on the recapitalization of Cell C, including restructuring of over $1 billion debt and other creditors at Cell C and $130m in New Money Funding.
Cell C, third largest of four mobile network operators in South Africa, successfully completed a restructuring of over $1bn of liabilities and raising over $130m in New Money Funding.
Cell C was founded in 2001 and offers mobile voice and data communication services and devices to customers, including individuals, businesses, and the South African government.
Cell C faced operational and liquidity challenges during 2018 and 2019 given the highly competitive nature of the local market and the unsustainable debt burden in a very complex structure, which included significant financial leases, vendor debt, and financial debt.
In July 2019, the Company missed interest payments, leading to an informal standstill, which precipitated the need to restructure liabilities of the Company and raise new money.
Blue Label Telecoms, the primary distributor for Cell C products and services and its largest shareholder (having acquired 45% in August 2017 as part a prior restructuring at Cell C), retained Houlihan Lokey as their financial advisor to advise regarding its interest within Cell C and options to support the new money need of Cell C’s business.
Houlihan Lokey worked closely with Cell C management, incumbent lenders and lessors, shareholders and other key stakeholders to implement a recapitalization of the business.
BLT (via TPC) injected c. $130m new money into Cell C to provide liquidity and working capital to the business. Certain lenders were cashed-out with some of the existing lenders rolling over their exposure. The lender group to Cell C included local South African banks alongside international banks in Lebanon and China as well as credit funds in New York and London.
The financial restructuring was coupled with a consensual compromise of certain lease obligations to achieve a sustainable balance sheet and operating cost base going forward as part of a wider turnaround plan.
“We are delighted to have advised BLT and worked with Cell and its constituents to implement a consensual restructuring and recapitalization of the business. This was a complex transaction only made possible through the collaborative effort amongst the company, shareholders, local and international lenders, and other related stakeholders,” said Arun Reddy, Managing Director, Houlihan Lokey.