Cell C creditors pursuing rejected Telkom proposal with legal help

Cell C creditors pursuing rejected Telkom proposal with legal help

Cell C’s creditors are attempting to secure the operator’s takeover by Telkom South Africa, after it was announced that the proposal had been rejected.

Bloomberg reports that a number of the beleaguered Cell C’s creditors could force the operator into liquidation in order to prevent it from attempting an alternative recapitalisation strategy, and have hired the investment banking firm Moelis & Co. and corporate lawyers Linklaters and DLA Piper to push for Telkom SA’s proposal.

The unnamed creditors are reportedly looking to break ranks with Blue Label Telecoms, which acquired a 45% stake in Cell C in 2016. Bloomberg has claimed that the creditors are pushing Cell C’s board to act independently of Blue Label.

Cell C is understood to be interested in a deal with local investment firm Buffet Group, while Telkom believes it can compete more effectively against South Africa’s main players Vodacom and MTN if it folds Cell C’s operations into its own.

Bloomberg notes that the Telkom proposal would deliver Cell C a return of around ZAR0.86 (USD0.06) for every ZAR1.00 owed, while its creditors would need to “take a deeper haircut” under the Buffet Group deal.