Digicel sets talk on $1.4 billion two-part eight-year senior notes offer

By Paul A. Harris

St. Louis, Feb. 21 - Digicel Group Ltd. set price talk for its $1.4 billion two-part offering of eight-year senior notes on Wednesday, according to an informed source.

The Caribbean wireless telecommunications network operator talked a $1 billion tranche of cash-pay notes at 9% to 9¼%.

Meanwhile, Digicel talked a $400 million tranche of PIK toggle notes to price 25 basis points behind the cash-pay notes. Should the issuer elect to make an in kind interest payment, as opposed to a cash payment, the coupon steps up by 75 bps.

Pricing is expected Thursday afternoon.

Citigroup and JP Morgan are joint bookrunners for the Rule 144A for life notes. Credit Suisse and Lehman Brothers, Goodbody Stockbrokers and Davy Securities are the co-managers.

Both tranches of notes will come with three years of call protection.

Moody's Investors Service assigns its Caa2 rating to both tranches of senior notes. Fitch rates the notes at CCC+.

Proceeds will be used to purchase outstanding shares of Digicel Ltd. for cash, as well as to provide working capital and for general corporate purposes.

Digicel Group Ltd. is a newly created Bermuda incorporated company formed by Denis O'Brien, who currently owns 78% of the shares of Digicel Ltd. on a fully diluted basis.

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