Big call for Digicel
When Digicel, the largest mobile telecommunications operator in the Caribbean, launched its mobile telecom business in the Pacific Islands, it required a structured project financing to ensure optimal risk diversification for lenders and structural flexibility and efficiency for the borrowers.
Amidst a challenging market environment in fourth quarter 2008, Citi and ANZ arranged a US$156mn multi-currency limited-recourse financing for Digicel to support its new mobile services in countries such as Tonga, Samoa, Vanuatu and Fiji.
The transaction marks the inaugural financing for Digicel Pacific, a separate sister company of the Digicel Group in the Caribbean. It delivers seven-year financing to South Pacific islands which, in most cases, have never been involved in syndicated debt financing.
Leveraging Digicel’s and Citi’s relationships with official agencies from previous financings, Citi and ANZ co-arranged a fully subscribed financing from the International Finance Corporation, FMO, the European Investment Bank, and several commercial banks.
The financing provides individual direct loans to separate operating companies including Digicel Tonga, Digicel Samoa, Digicel Vanuatu and Digicel Fiji.
An innovative transaction, the financing provides for both US dollar and local currency (Fiji dollar and Samoan tala) tranches to minimise currency mismatch. The facility is comprised of a US$129.1mn tranche, sourced from various lenders; a WS$5.4mn tranche from ANZ; and a F$41.2mn tranche from both ANZ and Bank of South Pacific.
The financing is structured as a portfolio credit to provide diversification for lenders, while still permitting lender flexibility to choose which markets to lend into.
Commenting on the launch of Digicel Fiji in September 2008, Digicel Pacific CEO, Vanessa Slowey said: “Communications technology is at the heart of all nations and the people of Fiji have put up with inadequate services for far too long. Digicel Fiji will provide innovative and accessible telecommunications services that meet and exceed customer demand, and advance Fiji’s mobile technology to an entirely new level.”
Borrower: Digicel Pacific
Mandated lead arrangers: Citi; ANZ
Additional lenders: Bank of South Pacific; International Finance Corporation; FMO; European Investment Bank
Tenor: 7 years
Date signed: October 2008