O’Brien to net €510m from Digicel Pacific
By Samantha McCaughren, Business Correspondent
Telecoms tycoon Denis O’Brien is to net €510 million in cash from the sale of his Digicel Pacific (DPL) company to its larger parent, Digicel Group.
An update on the financial performance of O’Brien’s Digicel Group includes details of the deal, which puts a value of $1.1 billion, including debt, on DPL. Shareholders will receive $825 million (€693 million) of this, with O’Brien getting the lion’s share.
O’Brien owns 84 per cent of DPL, the rest being owned by third-party investors and management.
It is likely that the acquisition would have been approved by Digicel bondholders, who have lent several billion dollars to the company.
Last December, the group completed a $500 million corporate bond fundraising.
The deal is essentially an O’Brien company buying another O’Brien company, but the sale allows the entrepreneur to take a substantial amount of cash out of his businesses.
The proceeds will no doubt be welcomed by O’Brien, who has seen his €500 million investment in Independent News and Media (INM) shrink to about €50 million over the past year.
The financing for the DPL transaction is ‘‘being evaluated’’ by the Digicel Group but it is expected that DPL will be consolidated into the group for the financial year ending March 2011.
Digicel said that it had evaluated ‘‘numerous acquisition opportunities to continue its growth, reinforce its business, and capitalise on its management talent and resources’’ over the past 18 months.
The group stated in its financial update that ‘‘reinvestment in growth is the best use of Digicel’s funds. This transaction boosts Digicel’s scale and enhances the value of the existing enterprise while further diversifying risk.”
DPL has mobile phone businesses in six markets in the Pacific region and had 1.63 million subscribers at the end of 2009.
The Digicel group has 10.75 million subscribers in 32 markets in the Caribbean, Central America and Pacific. In the nine months to December 31, 2009, revenues were ‘steady’ at $1.3 billion, while earnings (Ebitda) were up 9 per cent year-on-year at $185 million for the quarter.
The financial update also said it had doubled free cash flow from $117 million to $236 million for the nine months to December 31, 2009.
The group said DPL would provide it with an opportunity to enter new markets and was an asset which would continue ‘‘to build value for Digicel Group as DPL’s markets mature’’.
