Cell C downgraded to lowest investment level

By Jessica Anne Wood

Mobile network provider Cell C has been downgraded to the lowest investment level (D) by ratings agency Standard & Poor’s. In a statement by S&P, said: “The downgrade reflects our view that the delay in concluding the restructuring agreement continues to constrain Cell C's liquidity, and that the company's decision to miss interest payments in January 2017 on its €400 million (R5 734.27 million) senior secured bonds due in 2018 is a default.”

The ratings agency added: “Cell C had received waivers from its lenders for missing principal payments through January 2017 on its debt instruments, but it is now beyond the waiver period and has missed interest payments on its senior secured bonds. The company has not sought bankruptcy protection, and we expect it will continue to operate and meet its non-debt obligations, including payroll and suppliers. However, we note that the company currently relies on its lenders not exercising their acceleration rights as negotiations on a restructuring continue.”

When contacted for comment, Cell C had the following response: “Cell C is currently engaged in a recapitalisation process, which is essential to delivering a sustainable capital structure for Cell C. As part of this process, various capital and interest payments to lenders have been deferred. This has no direct impact on the underlying business of Cell C and the operational performance of the company remains strong.”


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