The telecom provider, Airtel Africa Plc, has disclosed that it redeemed $450m worth of senior notes prior to their maturity date of 2024.
According to the telecom provider, the early redemption, made out of the Group’s cash reserves, is in line with its strategy of reducing external foreign currency debt at Group level.
Meanwhile, Senior debt, or a senior note, according to Corporate Finance Institute, is money owed by a company that has first claims on the company’s cash flows, which means that the lender is granted a first lien claim on the company’s property, plant, or equipment in the event that the company fails to fulfill its repayment obligations.
“Further to our announcement of 22 June 2022, Airtel Africa, a leading provider of telecommunications and mobile money services, with a presence in 14 countries across Africa, today confirms the settlement of the previously announced cash tender offer to redeem up to $450m of the $1 billion of 5.35 percent Guaranteed Senior Notes due 2024 (‘Notes’) by its subsidiary Bharti Airtel International (Netherlands) B.V. (‘BAIN’).”
Airtel Africa Plc
Airtel Africa noted that an aggregate principal amount of $450m of Notes have been accepted for purchase for a total of $462.6m.
“All Notes accepted for purchase have been cancelled ahead of their maturity in May 2024. The original cap on the redemption of $300m, as mentioned in the release of 22 June, was increased on 6 July 2022 as BAIN, in its sole discretion, decided to achieve a larger debt reduction through the use of cash resources.”
Airtel Africa Plc
The company indicated that the decision to reduce its intercompany loans is driven by the growing risk exposure to foreign currency debts.
Airtel had an external debt profile of over $1 billion as of March 2022 when it reported its last full-year audited accounts. The company has since its IPO in June 2019, deleveraged its US dollar debt exposure. Over this period the Group has reduced its USD HoldCo debt by c.$1.7bn and improved its leverage ratio to 1.3x net debt to underlying EBITDA at 31 March 2022.
Airtel Africa had in its financial report in 2020 announced plans to sell about 4,500 telecommunication towers across five countries, including Tanzania and Madagascar, to help reduce $3.5 billion of debt and also help the company prepare for bond repayments. The Group had a repayment of $890m due in May 2020.
As of March 2022 when it reported its last full-year audited accounts, Airtel had an external debt profile of over $1 billion.
Also, in March 2022, the company repaid its $505 million senior secured notes one year ahead of their March 2023 redemption date.
Airtel in 2021, exited its Ghana operations after posting consecutive losses and losing over 4 million subscribers in the country.
The Government of Ghana acquired 100 percent shares of Airtel Ghana Limited along with all customers, assets and agreed liabilities.
Airtel has reportedly funded operations in Africa, where it has failed to consolidate its market through lots of borrowings.
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