Phil Green, president of Cable and Wireless Jamaica.
Cable and Wireless Jamaica's (C&WJ) long-term debt has more than doubled in a year to just under $10 billion, but the majority is funds injected by its British parent, which has thrown billions of dollars at the company as the new man Phil Green nurses it back to health.
At its financial year end March 2008, C&WJ owed Citibank NA close to $4 billion and its ultimate parent $6 billion but the short-term bridge financing bank loan was subsequently paid off on May 12 "through financing arrangements from a related company", leaving Jamaica more heavily indebted to its parent.
Through Cable and Wireless International, on whose board C&WJ president and chief executive officer Green sits, the Jamaican operation secured a $3.925 billion syndicated loan to pay off the debt owed to Citibank.
'Getting the basics right'
The debt restructuring is meant to give the Jamaican company breathing room and unfettered cash to redefine its operations, now struggling to shake off $2 billion of accumulated losses, and maintain focus on 'getting the basics right' but also to implement a transformation plan which includes improving call centre operations and network performance in the areas of Internet.
At balance sheet date in March, C&WJ had $846 million in cash, down from $1.4 billion, while its debt financing charges grew to $1.5 billion.
C&WJ yesterday declined comment on the terms of what appears to be a soft loan from CWI, and the expected impact on its debt servicing charges in the periods ahead.
"We would not normally disclose the details of repayment arrangements with our parent company," said spokesman Errol Miller.
But the loan from CWI would have given Jamaica both liquidity and breathing room to recover from its working capital deficit of $946 million, an improvement on the $1.1 billion gap between short term assets and short term liabilities.
C&WJ has twice as much loans on its books than a year ago when its combined borrowings from its parent and a Jamaican government-backed loan from the Export Development Corporation amounted to $4.36 billion.
Green is in the process of throwing out the company's mobile infrastructure, and is going cutting edge with 3G technology. The upgrades are being financed from C&WJ's own resources, said Miller. C&WJ has contracted Ericsson at $2 billion for the job.
Alongside that, his plans include new products like consumer wireless broadband, and what the company says in its annual report will be a sharper focus on cost reduction and quality improvement across all products.
business@gleanerjm.com
