According to recent reports, Blue Label Telecoms is planning to acquire 35% of Cell C for R4 billion. This will be part of a major restructuring for the telecoms operator with current controlling shareholder, Oger Telecom, diluting its stake from 75% to about 27%.
The proposed deal will also see Cell C employees acquiring a 30% stake in Cell C for R2.5 billion. The money for this will be raised through a financial institution and paid down through dividend flow from Cell C, over a number of years.
Cell C’s black economic empowerment partner CellSAf’s stake will also be reduced from 25% to 9%.
The proposed restructuring would mean that 3C Telecommunications (Oger Telecom and CellSAf) will hold 35% of equity, Blue Label a further 35% and staff and management the remaining 30% with no single controlling shareholder.
The deal will provide a major cash injection to Cell C, significantly reducing its debt to less than R8 billion. According to Cell C CEO, Jose Dos Santos, Cell C will be targeting further debt deduction over the next year, with Oger Telecom also pledging a significant cash injection.
“The intention is to reduce the debt to R6bn over the next 12 months,” Dos Santos said.
As part of the agreement Dos Santos would remain as CEO for at least the next five years.
Cell C’s board is currently assessing the offer from Blue Label and Cell C employees.
“The restructuring is subject to conditions precedent, including the execution of agreements typical of a restructuring of this nature and the obtaining of all requisite regulatory approvals,” it said in a statement.