Good news about R45-million Cell C debt

Real estate investment trust Attacq says Cell C has repaid R44.9 million of the rental arrears it still owed the company. This was the first tranche of Cell C’s outstanding debt to Attacq.

In its half-year results released on Tuesday, Attacq revealed that Cell C had paid on time, honouring its debt restructuring agreement involving its historical rental arrears as of 28 February 2022.

Cell C went through two recapitalisation deals in an effort to prevent the mobile operator from going bankrupt.

This included a R5.5 billion cash injection from The Prepaid Company, a wholly-owned subsidiary of Blue Label Telecoms, and a R1.03-billion loan.

Blue Label also settled creditors’ claims and holds Cell C airtime and data stock of over R2.5 billion.

Overall, Blue Label subsidiaries have made financial contributions of over R14.4 billion to Cell C.

In addition to Blue Label’s substantial financial support, the last recapitalisation offered debt holders two options.

They could take an 80% haircut and exit, or they could remain as a debt holder in the new Cell C and take a 45% haircut, with the balance paid out in later years.

Blue Label previously told MyBroadband that the second option was the higher risk, higher reward scenario.

Attacq is one of the debt holders who selected the latter option.

In addition to disclosing that Cell C has met its debt commitments to Attacq, the property trust revealed that the mobile operator’s former walk-in centre remains unoccupied.

The walk-in centre is on the same campus as the Cell C office building and accounts for 20% (4,920m²) of Attacq’s total logistics hub space (23,580m²).

“Historically, Campus Connect, i.e. the Cell C Campus, was included in the Waterfall City segment under the collaboration hubs,” Attacq stated.

“The chief operating decision-maker has identified the need to differentiate between the Collaboration and Logistics components within Campus Connect,” it explained.

“As a result, Global mobile and the Campus Connect Walk-in centre are now included in the logistics hubs sector, while the remaining area continue to fall under the collaboration hubs sector.”

Settling Cell C’s debts

Attacq is one of several creditors who remained invested in Cell C.

Blue Label co-CEO Brett Levy said earlier this year they are close to concluding a transaction to buy over a R463.6 million loan that Cell C had with international investment fund Gramercy.

At the beginning of November, Blue Label announced that its subsidiary and Cell C’s majority shareholder, The Prepaid Company, concluded a binding term sheet with Gramercy to buy over the loan for R450 million.

The Prepaid Company holds a 63.19% economic interest in Cell C. However, Blue Label’s voting rights in Cell C are currently capped below 50% until it gets permission from the Competition Tribunal to become the controlling shareholder.

Blue Label explained that Gramercy’s beneficial owners are various commingled funds and a large UK corporate pension plan.

The company previously explained that Cell C and Gramercy entered into a loan agreement on 21 September 2022, under which Gramercy has a claim of R414,765,527 plus interest.

The claim bears interest at 10% per annum and Cell C was required to be settled it by no later than 31 March 2026.

The purchase price for Gramercy’s claim is payable in four non-interest-bearing instalments of R112.5 million. The payments are to be made on the date the transaction closes, 30 November 2025, 31 March 2026, and 30 November 2026.

Blue Label noted that the necessary conditions precedent were not met by 30 November.

Asked which conditions were outstanding, Levy said they were only waiting for the South African Reserve Bank to clear the foreign currency transaction.

He said they are expecting the clearance soon, which will allow the transaction to proceed.