CellSAf lambasts Cell C over deal
BUSINESS LIVE / 24 MAY 2018 - 05:55 / NICK HEDLEY
Cell C’s black economic empowerment investor, CellSAf, has again lashed out at the mobile operator and its new major shareholders, saying the company’s recapitalisation deal has flopped.
This follows a downgrade of Cell C’s debt by S&P Global Ratings early in May. S&P said while the company had performed in line with expectations, it could soon face a liquidity shortfall if it failed to secure additional funding.
Blue Label and Net1 bought 45% and 15% of Cell C, respectively in a recapitalisation deal finalised in 2017.
CellSAf, whose stake in Cell C was watered down on completion of the deal, said on Wednesday if the Competition Commission deemed the transaction to be a merger, Cell C, Blue Label and Net1 could be liable for penalties. The commission is yet to state its position.
CellSAf said it was not confident that it and Cell C staff would receive returns on their investments in the operator.
Both CellSAf and Cell C staff had to repay loans used to fund share purchases, while Blue Label and Net1 had "underpaid" for their holdings.
"This act, of the new shareholders giving themselves the lion’s share of the company for a pittance, has left Cell C seriously underfunded, unable to perform and unlikely to be able to deliver sufficient returns to enable the staff and [empowerment] shareholders to extinguish their debt," CellSAf said.
Graham Mackinnon, Cell C’s chief legal officer, said CellSAf’s claims "are in keeping with the litany of untruths and distortions that it has made over the years".
Cell C said earlier in May it had instituted measures to address liquidity concerns ahead of its listing in 2020. The company was "well advanced" in arranging long-term facilities and had secured shorter-term facilities in the interim.
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