JOHANNESBURG (Reuters) - Debt-laden telecoms group Cell C Ltd [SAOGRC.UL] plans to raise 6.5 billion rand ($428 million) to help reduce its borrowings through the sale of shares to Blue Label Telecoms BLUJ.J and Cell C's own staff and management.
The deals are part of Cell C’s efforts to pay down debts which last year forced it into a restructuring with bondholders involving a three-year maturity extension to July 2018.
Blue Label, a distributor of prepaid airtime and electricity, has offered 4 billion rand ($263 million) for 35 percent of Cell C, a private mobile phone operator whose staff and management will pay 2.5 billion rand for 30 percent in the company.
Cell C, founded in 2001 and majority owned by Saudi’s Oger Telecom, said it would use the money to reduce debt to at least 8 billion rand.
“We’re now building a stronger and more sustainable growth platform while refinancing our debt in South African rand on favorable terms,” Cell C Chief Executive Jose Dos Santos said.
The deal, expected to complete in June 2016, is subject to approval from Cell C’s board, regulators and Blue Label shareholders.
For Blue Label, the largest distributor of prepaid airtime and data in South Africa, the deal gives it a share of profits on a product it distributes.
It also gives Blue Label about 20 million mobile phone users, though Cell C is facing a consumer backlash due to slow network speeds.
The deal comes three weeks after South African fixed-line phone operator Telkom TKGJ.J abandoned talks with Oger Telekom because the two parties could not agree on the price for the asset.
(1 South African rand = $0.0653)
Editing by David Holmes
Our Standards: The Thomson Reuters Trust Principles.