Digicel launched tender offers to exchange US$7 billion in principal amount of notes issued by Digicel Group Two Limited, Digicel Group One Limited, and Digicel Limited in consideration for US$5.3 billion in principal amount of new debt in lower tier subsidiaries. Digicel Group 0.5 Limited, a new subsidiary formed to acquire Digicel Group’s assets across its Caribbean, Asia Pacific, and Central American markets, will issue convertible notes as part of the tender offers which, if still outstanding after the third anniversary, would give creditors 49% ownership of the business.
Digicel Group One Limited successfully concluded a scheme of arrangement to implement the exchanges using an innovative mechanic whereby (i) tender votes were deemed to be scheme votes; (ii) the court granted an order vesting all the assets of Digicel Group One in Digicel Group 0.5 Limited. This allowed Digicel to reduce its liabilities to its noteholders and permitted the founder to capitalise the new structure with US$50 million in new capital. Digicel’s use of a Bermuda process rather than Chapter 11 under the U.S. Bankruptcy Code avoided the need for debtor in possession financing at a time when credit markets were disrupted, as well as avoiding litigation under the “absolute priority” rule under the U.S. Bankruptcy Code.
Conyers advised Digicel on Bermuda aspects of the tender offers as well as being main counsel for the scheme of arrangements under section 99 of the Companies Act 1981 of Bermuda.
Director Christian Luthi and Associate Edward Rance led the Conyers team with Director, Marcello Ausenda, Counsel, Robert Alexander and Associates Rhys Williams, Andrew Barnes and Jacari Brimmer-Landy alongside Davis Polk & Wardwell LLP.