Denis O'Brien (centre), Digicel Group chairman and patron of Digicel Foundation; Major General Robert Neish (left), executive director of Digicel Foundation, and Harry Smith, Digicel Foundation chairman, admire a miniature house made of
papier-mâché by youth at Stella Maris Foundation, 1 Grants Pen Road, Kingston 8 recently. - CONTRIBUTED
DIGICEL RAISED US$300 million from international investors yesterday from an extremely successful bond offering led by Citigroup and J.P. Morgan.
The issue yielded 9.25 per cent maturing in September 2012, and immediately began to trade at a premium of up to US$3.60 over the original US$100 offer price in the 'grey market'.
Digicel was originally seeking to raise only US$250 million, but appears to have expanded the offer due to the extremely high demand. According to international brokers, the issue could have been as much as 12 times oversubscribed.
International bond broker Greg Fisher described the success of the deal as due to "high demand for a solid corporate name".
The wireless company is controlled by Denis O'Brien. The company started operations in Jamaica in April 2001 and now offers GSM mobile services in eight countries of the Caribbean including Jamaica, St. Lucia, St. Vincent, Aruba, Grenada, Barbados, Cayman, and Curaçao. In addition, it recently acquired licences in Trinidad and Tobago and Haiti and has announced an agreement to acquire Cingular's Caribbean operations.
The majority of Digicel's revenues and the vast majority of its earnings before interest taxation, depreciation and amortisation (EBITDA) come from its Jamaican operations, so that the country risk of Digicel's operation will be perceived by international investors as predominantly Jamaican.
The timing of the issue was, therefore, good, following as it did on the successful Jamaican 2015 Eurobond issue and the recent Air Jamaica issue. The fact that the deal had a similar yield to these issues, but a shorter maturity, combined with the international credibility of its management team, would have made the offer attractive to a yield-starved international market.
