Digicel Limited (DL), an affiliate of Digicel Group Limited, on Tuesday offered up for sale an additional US$250 million of its 12 per cent senior notes, in a private placement in New York, a portion of which will finance future unspecificied acquisitions.

The notes mature in 2014, alongside another US$350 million already issued.

The placement was handled by Citigroup, Credit Suisse and JP Morgan as joint bookrunning managers, according to documents acquired last night by Wednesday Business.

The debt, which was rated B1 by Moody's and B- by Fitch, is guaranteed by nine of the Irish company's subsidiaries, including Digicel Jamaica.

It was unclear whether any Jamaicans were invited to take up the bonds, but market sources say if local investors participated they would likely have asked their brokers to buy and hold the notes in custody on their behalf.

US$160,000,000 of new notes

"The notes being issued by us are being issued as additional 12 per cent Senior Notes due 2014 under the indenture dated March 11, 2009. We are offering an aggregate of US$160,000,000 of new notes," said DL's offer document.

"Denis O'Brien, the selling noteholder, who indirectly owns 95 per cent of our common shares on a fully diluted basis, is offering an aggregate of US$90,000,000 of existing notes a portion of which he acquired on March 11, 2009, in cash and a portion of which he acquired as partial consideration for selling a portion of his interest in our sister company, Digicel Holdings (Central America) Limited, to us on March 20, 2009."

Denis O'Brien, who also controls 100 per cent of Digicel Group - ultimate parent of Digicel Limited - has since the company's formation in 2001 showed a marked preference for debt to finance the mobile provider, whose holdings extend across the Caribbean and into Central America.

US$1.8-billion debt

Digicel Limited's debts, accor-ding to the offer document for 2014 notes, reached US$1.8 billion at March 31, 2009, or 2.68 times EBITDA of US$676.6 million. A portion of the DL debt, US$75 million, is owed to Digicel Group Limited.

Digicel Limited, a US$2.27 billion operation incorporated in Bermuda, also reported consolidated net profit of US$166 million from revenue of US$1.7 billion.

However, the company also disclosed that subsidiary Digicel Holdings Central America Limited has a big loss of US$176.6 million.

"We may continue to incur losses in the near future," the company said.

The company warned investors that, aside from its heavy indebtedness, the servicing of the notes on which payments are due quarterly is dependent on income flows from subsidiary companies, which in turn are subject to competition from LIME and América Móvil.

The net proceeds of the offer will be used "for general corporate purposes, including debt servicing and acquisitions," the offer document said.

business@gleanerjm.com