(Refiles to add dropped word "million" in the headline)
JOHANNESBURG, Oct 5 (Reuters) - South African distributor of prepaid airtime Blue Label Telecoms will pay 5.5 billion rand ($400 million) for a 45 percent stake in debt-laden mobile phone group Cell C Ltd, it said on Wednesday.
The deal is 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.
Following Blue Label's deal, Cell C will also issue new shares to staff, senior management and existing shareholders to help to reduce it borrowings to a maximum of 8 billion rand, Blue Label said.
Founded in 2001 by Saudi Arabia's Oger Telecom, Cell C has struggled to compete against established players Vodacom and MTN Group. ($1 = 13.7580 rand) (Reporting by Tiisetso Motsoeneng. Editing by Jane Merriman)