Blue Label is exploring a potential restructure of the group which may facilitate separation and potential future listing of Cell C on the Prime Segment of the Main Board of the Johannesburg Stock Exchange (JSE).
The proposed restructure, which Blue Label outlined in a statement today, is expected to encompass various ancillary transactions, aimed at optimising Cell C’s capital structure and balance sheet in preparation for a potential separation and future listing on the JSE.
Should Blue Label elect to implement the proposed restructure, it is envisaged that the various restructuring steps will be inter-conditional and contingent upon the potential listing of Cell C.
The implementation of the restructure and potential listing will remain subject to, among other conditions, approval by the boards of Blue Label and Cell C, requisite shareholder and regulatory consents, and favourable market conditions.
According to the statement from Blue Label, the proposed restructure is expected to deliver significant benefits for the company and its shareholders. A separation and listing of Cell C from Blue Label’s existing distribution businesses will allow investors to independently assess the value and strategic focus of each business.
Key components of the proposed restructure include:
- Airtime asset transfer: The Prepaid Company, a wholly-owned subsidiary of Blue Label which holds shares and debt claims in Cell C, will transfer Cell C airtime currently held by TPC on its balance sheet to Cell C in exchange for newly issued additional equity in Cell C.
- Debt-to-equity conversion: TPC’s outstanding debt claims against Cell C will be capitalised and converted into equity, further reducing Cell C’s leverage.
- Acquisition of Comm Equipment Company: Cell C will acquire 100% of CEC (a wholly owned subsidiary of Blue Label) from TPC in exchange for additional Cell C shares. CEC is a subsidiary responsible for Cell C’s postpaid offerings. The internalisation will enable Cell C to assume full responsibility over its postpaid customer base, including oversight of supply chain, commercial operations, marketing, billing, credit and collections.
- SPV restructure: The Special Purpose Vehicles (SPVs) currently holding equity interests in Cell C will also be restructured as part of the broader initiative, aligning their ownership structures with the redefined capital framework.
Overall, the restructure is intended to streamline operations, improve financial sustainability, and enhance Cell C’s strategic readiness for long-term growth and potential listing.
The restructure proposal comes as a strengthened Cell C executive management team has been able to successfully return the Cell C business to a strong growth trajectory with significant improvement
in both operational and financial metrics, driving the sustainable growth and profitability of Cell C going forward.