(Adds minority investor comment, Cell C board comment)
JOHANNESBURG Feb 27 South Africa's Cell C and
its creditors have agreed a deal with Blue Label Telecoms
and an unnamed investor that would reduce the mobile
phone network operator's debt to 6 billion rand ($463 million),
Blue Label said in a statement on Monday.
Cell C is South Africa's third largest mobile phone company
but debts totalling about 20 billion rand have hampered its
growth in a maturing phone market where rivals Vodacom
and MTN are much bigger.
Blue Label, the largest distributor of pre-paid voice and
data airtime in South Africa, agreed last year to pay 5.5
billion rand for a 45 percent stake in Cell C and said it would
lead the company's recapitalisation plan.
Blue Label said on Monday that its stake in the firm would
remain unchanged even though the unnamed investor in the deal to
lower Cell C's debt would be taking 15 percent.
"The third-party investor is to subscribe for 15 percent of
the share capital of Cell C for 2 billion rand," Blue Label
Shares in Blue Label were up 4.6 percent at 18.61 rand by
"The restructuring agreement addresses the over-geared
balance sheet of Cell C and will unlock further improved and
exciting performance," Cell C said in a statement.
But a minority shareholder of Cell C said last week it would
fight the deal.
CellSAF, which holds a 25 percent stake in 3C
Telecommunications, which in turn owns Cell C, launched a court
challenge against the deal last year.
CellSAf said in a statement it remained "resolutely opposed
to the so-called recapitalisation of Cell C, and will continue
to fight against it despite the announcement by Blue Label that
the finalisation of the transaction has been postponed to 30
The firm claimed that it had not been consulted about the
involvement of a new investor.
But Cell C's board denied this on Thursday, saying that
CellSAf's representatives on the 3C Telecommunications board had
been supplied with all necessary documentation and information
about the plan.
"The recapitalisation plan brings new cash equity as well as
the contribution of strategic partners into Cell C, both of
which are critical to Cell C’s continued growth and success,"
the Cell C board said in a statement.
($1 = 12.9525 rand)
(Reporting by TJ Strydom; editing by David Clarke, Greg Mahich)