Cell C eyes JSE listing to raise R7.7 billion

Cell C plans to list all of its issued ordinary shares on the JSE, with the aim of raising R7.7 billion following a substantial restructuring.

This listing will be through a private placement of existing shares, with all proceeds set to go to the subsidiary of Cell C’s current owner, Blu Label’s The Prepaid Company (TPC).

On Wednesday, 5 November, Blu Label announced Cell C’s intention to list on the JSE and outlined the company’s restructuring plans prior to its listing.

Cell C is set to list on the JSE’s Main Board through a private placement of existing shares currently held by TPC, which is a wholly owned subsidiary of Blu Label.

The company explained that this offer aims to raise R7.7 billion, which includes a R500 million overallotment option and a R2.4 billion BEE allocation.

“The listing of Cell C, together with the benefits to be derived from the successfully completed turnaround strategy and its improved sustainability, will enhance the value of Cell C and, in turn, restore its shareholder value,” Blu Label said. 

The company said Cell C’s listing is expected to deliver significant benefits to both Blu Label and Cell C.

This includes providing Cell C with access to capital markets on an independent basis, which it will use to support further growth and to finance acquisitions or investments.

Blu Label specified that the proceeds from the listing will go to TPC, not Cell C, and will be used to settle debt, pay dividends, and support working capital.

Blu Label’s interest in Cell C started in 2017, when the company acquired 45% of the mobile operator.

This acquisition was done during a restructuring process that also created three special-purpose vehicles (SPVs) to store the distressed company’s debt. 

This severely complicated the companies’ structures, and as Cell C’s performance continued to deteriorate over the following years, it became increasingly more complex.

Therefore, before its listing can take place, Cell C will need to undergo significant restructuring, which will include –

• Debt-to-equity conversion: TPC’s debt claims against Cell C will be converted into equity.
• Acquisition of Comm Equipment Company (CEC): CEC is currently owned by Blu Label through TPC. Prior to listing, Cell C will acquire 100% of CEC.
• Airtime asset transfer: The airtime of TPC’s books will be transferred to Cell C in exchange for shares.
• SPV restructure: The SPVs holding Cell C’s shares will need to be unwound.
• Flip-up: All of Cell C’s current stakeholders will exchnage their shares for Cell C Holdings shares

Blu Label emphasised that, after this restructuring, TPC will retain a majority stake in Cell C, with the mobile operator’s executive team members set to hold a 4.5% stake.