Home » Douglas Stevenson-led Cell C seeks bailout from RMB and Investec

Douglas Stevenson-led Cell C seeks bailout from RMB and Investec

by Ishioma Emi

The South African mobile operator Cell C Pty Limited (Cell C) is seeking a bailout of up to $280 million (4 billion rand) from Rand Merchant Bank (RMB) and Investec Limited to be deployed as fresh capital, Bloomberg reported

The company is already in advanced talks with RMB, a subsidiary of FirstRand Limited, and the Anglo-South African international banking and wealth management group, Investec.

“RMB can confirm that we are in discussions with Cell C and its shareholders regarding financing. Client confidentiality precludes us from sharing any details,” an RMB representative was reported as saying.

Cell C is South Africa’s fourth-largest mobile phone operator led by CEO Douglas Craigie Stevenson. He was appointed interim CEO in March 2019, replacing Jose Dos Santos, who announced his resignation in February 2019.

“The biggest obstacles have been brought about by own goals, namely a misguided business strategy, a recapitalization in 2017, which burdened the business with unsustainable debt, poor decision-making and bad governance,” Stevenson wrote to TechCentral. He noted that the mobile phone operator has been distressed for years.

With near to $701 million (10 billion rand) in debt, the telecom company is approaching the end of its recapitalization* plan. However, deals with former creditors have been finalized to pave the way for new funding, Bloomberg reported. Meanwhile, recapitalization is in progress and at the critical stage.

In January, it was speculated that South Africa’s number-one telecom operator, Vodacom Group Limited, sought to buy out Cell C to strengthen its position as the country’s market leader. Vodacom is a subsidiary of the London-based telecom giant, Vodafone.

If the deal had gone through, Vodacom would have gained a little over 1 million high-paying subscribers and grown its 5.8 million post-paid subscriber base.

*Recapitalization is the process of restructuring a company’s debt and equity mixture, often to stabilize a company’s capital structure.

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