(Bloomberg) -- South African wireless carrier Cell C Pty Ltd. has begun talks to delay debt payments and hired consultants to probe its business practices and advise on a restructuring, sending shares in its biggest investor to a decade low.
Cell C is laboring under 8.9 billion rand ($639 million) of debt and trying to secure new funding from a consortium of investors. The company has begun a round of cost cuts, has frozen hiring and is reviewing its contracts, wrote Douglas Craigie Stevenson, Cell C’s chief executive officer, in an open letter.
Cell C has struggled to compete with Vodacom Group Ltd. and MTN Group Ltd. -- well established carriers that control the bulk of the South African market in wireless services and operate the biggest networks. It has 2.6 billion rand of debt maturing in August next year.
“We are engaging with our lenders to re-term our debt and allow us sufficient time to implement the Buffet transaction,” Craigie Stevenson wrote in an email reply to questions from Bloomberg, referring to the funding talks with the Buffet Group.
Cell C has paid 116 million rand in interest due to bondholders for June and a further 90 million rand on another funding arrangement with local banks, added Craigie Stevenson, who replaced CEO Jose dos Santos earlier this year.
Shares in Blue Label Telecoms Ltd., which led a recapitalization of Cell C almost two years ago and holds a 45% stake in the carrier, fell more than 15% to their lowest since 2008.
PricewaterhouseCoopers will audit Cell C’s procurement practices and review processes, and law firm Bowmans will investigate any irregular business practices, according to the letter. Deloitte has been named as an independent financial restructuring adviser.
“Cell C has a zero-tolerance policy towards illegal or unethical activity,” Craigie Stevenson wrote in the letter.
(Adds shares at decade low in first paragraph.)
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