Embattled mobile operator Cell C has once again defaulted on payment of interest on its loans.
On Tuesday, the telco’s largest shareholder, Blue Label Telecoms, announced Cell C had missed December interest payment on a $184 million (R2.7 billion) loan, as well as capital plus interest payments on loan facilities with Nedbank, China Development Bank Corporation, Development Bank of Southern Africa and Industrial and Commercial Bank of China, which were due last week.
“Currently, none of the bilateral loan facilities have been accelerated as noteholders are aware and support that Cell C is committed to resolving the situation by agreeing to restructuring terms with its lenders while it also continues to work proactively with all stakeholders to improve its liquidity, debt profile and long-term competitiveness,” reads the Blue Label statement on SENS.
The debt-laden Cell C has been under pressure for some time, facing a myriad of problems, including job stoppages, declining revenue and debt management challenges.
In April last year, Cell C’s credit rating was lowered by Standard & Poor’s (S&P) to CCC- from CCC+, placing it deeper in trouble territory.
Then in June 2019, the operator was downgraded by global rating agency after it renegotiated terms of its R1.4 billion debt.
In August, it received a further downgrade for the third time by S&P for its debt profile.
Despite all the odds weighing against Cell C, CEO Douglas Craigie Stevenson has remained hopeful, telling ITWeb in a recent interview that the telco will be profitable and dismissing filing for business rescue as an option.
“I think it’s premature to look at business rescue at the moment. We don’t believe business rescue will benefit the company, or the industry as a whole.”
“We have been an investment or company in the making for the past 19 years and we have never produced profit to date. The implementation of a strong governance framework is important, and so is the implementation of a performance type of a culture within the organisation.
“There is an investment case in this business and it needs to be looked at going forward. We have to get it right and we have to compete on the market.”
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