By Kate Hennessy, Group Chief Financial Officer
How much of the proceeds will go to restructuring existing debts and how much will go to growth activities?
The bond and term envelope will mainly be used to refinance the group’s existing debt. A small portion will remain and will go to support our growth strategy by evolving our infrastructure, investing in our people and ensuring that our services meet current customer needs by expanding our digital solution offerings. Liquid Telecom is a digital solutions provider and we aim to build Africa’s digital future.
Since the coupon on the new bond was tightened by 300 basis points to 5.5% from our original 8.5% bond issue coupon, this also saved us cash flows. real cash flow in interest costs, which will improve the group’s financial position and further advance our growth strategy.
Where does the group see the greatest opportunities for growth? For example, data centers, fiber, etc.
We are very focused on underserved areas, a good example is our continued investment in DRC but also in South Sudan. There are other interesting geographic expansions in Africa that we are exploring. In addition, we are expanding our range of offerings by providing businesses with access to more digital and cloud-based services. Going forward, digital businesses that outperform the competition will do so because they are the leaders in orchestrating a diverse ecosystem of producers, service providers, and customers to respond quickly to new demand. They will also have the financial agility and effective contingency plans needed to respond, stabilize, recover and reinvent growth.
Data centers are not part of the narrow group of bonds and term loans. They have their own capital structure because their financing needs are large and cannot be met under the core group.
Will this bond placement significantly reduce the overall cost of capital for the group?
Yes, because of the lower coupon on the new bond, this will significantly reduce our cost of capital despite the increase in our total borrowing. The ZAR term loan also helps us to hedge the currency volatility we have experienced in the past by having all of our debt in USD while part of our profit was in ZAR and this should also help change the outlook for risk on the capital structure.
What types of investors have expressed interest? ie European and American pension funds?
We have seen strong interest from high quality investors from the UK, US, Europe and Asia, in addition to key orders from IFC, DEG and EAIF. The investor group was ubiquitous, from pension funds to investment funds to hedge funds. We appreciate the strong group of loyal investors that we have had in the bond since the first issue and we were delighted to see so many of them re-enter the new bond.
Did Liquid Telecom do an investor tour? And do institutional investors feel more comfortable with the story of African growth??
Yes, we met over 150 investors over two days of roadshows.
We believe this result reflects the growing confidence in Liquid Telecom and more broadly in African businesses as we seek to drive sustainable growth and positive social change across the continent.
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