Fitch puts Digicel on positive watch

Fitch Ratings said it placed all its Digicel's ratings on rating watch positive (RWP) following the announcement of the sale of the group's Pacific assets.

The RWP applies to Digicel Group Holdings Ltd. (DGHL; rated CCC) and its instruments (secured, unsecured and subordinated), Digicel Ltd. (DL; B-/RWP) and its unsecured instruments, and Digicel International Finance Ltd. (DIFL; B-/RWP) and its instruments (secured, unsecured, and subordinated).

On Monday, DGHL announced the sale of 100% of its Digicel Pacific Ltd. to Telstra Communications Ltd. for $1.85 billion, including performance earnouts. The transaction is expected to close in 1Q22.

“Fitch expects that the net proceeds of $1.4 billion at closing will be used to repurchase all of DGHL's secured ($1.05 billion outstanding), and most of its unsecured notes ($425 million outstanding). The additional $250 million earn out from hitting DPL revenue targets over the next few years should also enable the DGHL to pay back its convertible PIK note ($206 million outstanding). The transaction will enable the company to delever by approximately 5x, and is expected to improve its financial flexibility,” the agency said in a press release.

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