Digicel Said to Lay Out Debt Reduction Target Amid Yield Surge

Digicel Group Ltd, the mobile carrier company controlled by Irish billionaire Denis O’Brien, told bondholders it plans to cut debt through a mixture of earnings growth and so-called inorganic measures, two people familiar with the matter said.

Digicel aims to reduce borrowings to about 5.7 times earnings in the fiscal year 2019 from around 6.7 times in the year-earlier period, according to the people, who asked not to be identified as the details are not yet public. Capital expenditure will be reduced to between $330 million and $350 million, a drop of about 30 percent, the people said.

O’Brien founded Digicel in 2001 and turned it into a mobile-phone empire with customers spread from El Salvador to Vanuatu, financing the expansion partly with high-yield debt.
The company is meeting investors in a so-called “non-deal roadshow” as the yield on its 2020 bonds rises as high as 20 percent, more than doubling in the last three months.

Digicel told bondholders that it’s on track to meet its earnings guidance -- for adjusted earnings before interest, taxes, depreciation and amortization of just over $1 billion in the fiscal year 2018. It also said it’s sticking to sales guidance of about $2.4 billion, and detailed a new contract win, according to the people.

A company spokesman declined to comment.

— With assistance by Sebastian Boyd

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