Digicel has filed for bankruptcy in Bermuda but is insisting that it is business as usual.
In a statement, the company said: “We announced details of a proposed Scheme of Arrangement in the Bermudian Courts in connection with Digicel Group One Limited, which is purely an intermediate financing holding company.”
According to Walkers, an International Law Firm, “A Bermuda scheme of arrangement is a court-approved compromise or arrangement between a company and its creditors (or classes thereof).”
Walkers noted that a Bermuda scheme is most commonly used to implement a distressed financial restructuring by varying or compromising the rights of the relevant stakeholders of the company.
In its release, Digicel said: “It’s important to point out that this will have no impact on our day to day operations, our staff, our suppliers, our customers or any aspect of our ongoing activities – it is business as usual.”
Digicel observed that it announced refinancing activities at the start of April, which, when complete, will strengthen the company’s balance sheet by reducing debt, extending its maturities and reducing its ongoing financing costs.
Digicel also said it had overwhelming support from its debt-holders for the proposals, and it is now progressing with the required administrative processes.
The company highlighted that the Scheme has the support of over 97 per cent of its bondholders and also involves the appointment of a light touch joint provisional liquidators to oversee the implementation of the Scheme.
According to reports, global professional services company KPMG will assume the role of oversight.
The telecom company previously stated that the majority of its creditors holding notes maturing in 2022 agreed to swap into new debt maturing in 2024 issued by a new entity. This was part of a proposed transaction to cut about $1.7 billion of debt.
Digicel said that it would provide further updates on the situation as it progresses.