Norton Rose Fulbright advises leading South African mobile operator on complex financial restructuring

Business August 10, 2017

Global law firm Norton Rose Fulbright has advised Cell C, the third largest mobile operator in South Africa, in relation to the cross-border debt capital markets (DCM), bank finance and equity restructuring aspects of its substantial recapitalisation. As a result, Cell C’s net financial debt was reduced to approximately R6 billion.

The DCM transaction entailed the issue of two new secured bonds in exchange for Cell C’s formerly outstanding EUR400 million 8.625% First Priority Senior Secured Notes due 2018, governed by New York law. In exchange, Cell C issued US$184 million 8.625% First Priority Senior Secured Notes due 2020. In addition, US$279 million 8.625% Notes due 2022 were also issued - with highly-structured terms - by a special purpose vehicle whose sole asset is an 11.8% shareholding in Cell C.

The DCM restructuring involved the adoption by bondholders of a scheme of arrangement under Section 155 of the South African Companies Act 2008. The Section 155 proposal was sanctioned by the High Court of South Africa, Gauteng Local Division, in Johannesburg. The Section 155 proposal was formally recognised by the US Bankruptcy Court for the Southern District of New York through a proceeding under Chapter 15 of the US Bankruptcy Code, on which Norton Rose Fulbright also advised.

The bank finance transaction involved restructuring numerous existing bank loan facilities and security arrangements with Nedbank Limited, Development Bank of Southern African Limited, Industrial and Commercial Bank of China Limited and China Development Bank, culminating in bilateral facilities with Cell C for each lender, totalling in aggregate approximately US$275.5 million.

Alexandra Triptree, London banking and finance partner at Norton Rose Fulbright, comments:

“Having worked with Cell C for over 15 years, we are delighted to be able to advise it on this multi- faceted financial restructuring, bringing together our experienced lawyers from across the world, to assist in achieving Cell C’s strategic aims.”

Peter Young, London DCM partner at Norton Rose Fulbright, comments:

“The combined bank finance and debt capital markets aspects of the restructuring across three major jurisdictions was challenging and had numerous contingent parts. A significant percentage of Cell C’s existing bondholders formed a bondholder committee that was separately represented. On the DCM side, the court approvals required in the United States and in South Africa added further complexity.”

Haroon Laher, Johannesburg director, Head of Financial Restructuring and Insolvency at Norton Rose Fulbright, comments:

“The South African telecoms market is a dynamic one. We continue to see restructuring of this nature in the sector as companies look to access capital to further invest in a rapidly evolving and advancing industry.”

The international banking and finance team at Norton Rose Fulbright included banking and finance partner Ali Triptree and DCM partner Peter Young, assisted by senior associates Vishal Mawkin (DCM) and Alex Zekkos (bank finance) and associate James Morrison (DCM) in London, and banking and finance director Riza Moosa in Johannesburg. Director Haroon Laher in Johannesburg led advice on the South African court-sanctioned scheme of arrangement and US partner Kristian Gluck led advice on the Chapter 15 US Bankruptcy Code proceedings recognising the South African sanctioned scheme of arrangement.

The firm’s Johannesburg office, led by corporate directors Kevin Cron and Stephen Kennedy-Good, advised on the equity restructuring aspects of the transaction which involved the introduction of new shareholders, including Blue Label Telecommunications and Net1 Applied Technologies, as well as members of staff and management. The ownership of Cell C by South African shareholders increased from 25% to over 86% as a result, and the participation of historically disadvantaged persons in Cell C increased from around 25% to more than 30% ownership.

The recapitalisation secured the employment of some 2,500 full-time employees at Cell C and a further 15,000 people employed in the industry value-chain as a result of Cell C’s operational and commercial activities.

The cross-border Norton Rose Fulbright team worked with several law firms on the wider recapitalisation, which involved the injection of approximately Rand 7.5 billion new equity into Cell C and further bank finance facilities with orphan special purpose vehicles.

For further information please contact: 

Meeta Vadher, Senior PR Manager
Tel: +44 (0)20 7444 3097; Mob: +44 (0)7595 886 276

Notes for editors:

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