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Digicel urged to restructure debt

On the heels of  ratings agency Fitch warning that Digicel faces imminent refinancing risk and will likely have to restructure its 2021 bonds, news has emerged that the telecommunications company saw its earnings dip in the three months to the end of  September.
 
According to the Irish Times newspaper, a slump in the value of  currencies in some of  its main markets against the US dollar offset an underlying improvement in revenues.
 
Despite this, Digicel bonds edged slightly higher yesterday as investors took comfort from an improving business trend, excluding foreign-exchange-rate effects, with data revenues continuing to grow strongly, having overtaken flagging mobile voice revenues late last year.
 
Sources said earnings before interest, tax, depreciation and amortisation declined by one per cent in the quarter to US$250 million  compared with the same period last year.
 
While underlying revenues rose 4 per cent, they fell 1 per cent on a reported basis to $554 million, dragged down by a $26 million  currency hit.
 
This was mainly as a result of a weakening of  the Haitian gourde against the US dollar, the currency in which Digicel reports financials and in which most of  its $7 billion debt pile is denominated.
 
Digicel's cash position declined, however, to US$180 million from US$214 million  earlier this year. 
 
The Digicel update, issued to bondholders on Monday, did not address how it plans to go about refinancing US$1.3 billion  of  bonds that mature in early 2021, which has become a growing issue for the company's creditors and debt ratings firms.


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