Deloitte, a consulting firm, and Stephen Koseff, a former CEO of Investec, have been appointed as advisors for Cell C’s recapitalisation process.
“Deloitte was appointed to advise on the recapitalisation process. An Investment Committee that meets bi-weekly, was established under the Chairmanship of Stephen Koseff, to work with Deloitte on this difficult task as it involved negotiations with many lenders and bondholders from many different jurisdictions,” Larry Nestadt, chairman of Blue Label Telecoms, disclosed in the company’s latest annual report.
“I am most grateful for their efforts and am confident a settlement will be reached within the near future.”
Blue Label Telecoms, which owns 45% of Cell C, is involved in a process to recapitalise the struggling mobile phone operator.
Last month, Blue Label Telecom’s joint CEO Brett Levy said the recapitalisation was very complicated and taking longer than expected.
He said the company has dealt with two Chinese banks, two Chinese vendors, American bondholders, Lebanese banks, Lebanese bondholders and South African banks.
“To get everyone around the table and to get everyone to agree on the final umbrella agreement has proven to be a lot more difficult than we had envisaged and has taken a lot more time,” Levy explained. “We really believe we are going to recapitalise this business this year.”
Blue Label Telecoms expects to finalise the recapitalisation by the end of the year.
In May, Cell C received a nod from the country’s competition watchdog for its recapitalisation.
Gatsby SPV intends to acquire certain assets of Cell C.
The recapitalisation is aimed at addressing the struggling mobile phone operator’s almost R9bn long-term debt burden.
The owners of Gatsby SPV remain anonymous.
Cell C has struggled to make consistent profits since its launch in 2001.
JSE-listed Blue Label Telecoms and Nasdaq-listed Net1, which together hold 60% of Cell C’s equity, have written down their combined R7.5 billion investment down to nil.
PwC appointed advisor to restructure Cell C
Meanwhile, Blue Label Telecoms also disclosed that PwC had been appointed as advisors to restructure Cell C.
“At Cell C, we appointed PwC to advise on the restructuring of the business model and to achieve cost savings and improved procurement practices,” said Nestadt.
“We are cognisant of our role as Directors to correct the disastrous shareholder value destruction that followed the initial Cell C investment and wish to assure shareholders that we remain committed to see plans in place to recoup these losses.”
Nestadt further acknowledged that Cell C’s previous management made poor decisions.
“There is no disputing that we discovered poor governance processes and questionable past management decisions at Cell C, but I must report that, under the new leadership of Douglas Craigie Stevenson as Chief Executive Officer, and Zafar Mohamed as Chief Financial Officer, significant progress has been made in returning Cell C to a profitable footing at EBITDA level and significant strides have been made in improving governance and internal control processes,” he explained.
“A revised business model, cost-cutting, rightsizing and the new MTN roaming agreement, have all contributed to a good operational performance in a difficult trading environment.”