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Digicel draws on US$100 mln for hurricane spending

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Hurricanes in the Caribbean and sluggish Pacific growth led to reduced free cash flow and slightly higher debt levels for telecoms Digicel Group, according to a report from Fitch Ratings released this month.

“Our current leverage is in line with our expectations and we remain focused on deleveraging the business over time as per our stated strategy,” stated the telecoms, whose operations span more than 30 markets in the Caribbean, Central America and Pacific Islands.

Digicel refinanced roughly US$1.2 billion of its debt earlier this year to reduce its financing costs going forward, The Gleaner reports.

Fitch said Digicel “drew down its US$100 million revolver” to cope with the cash flow related to the impact of storms that hit the region, and that the company “expects to fully pay it off by end fiscal 2018 as insurance proceeds are received”. Digicel Group’s financial year ends in March.

Fitch said the telecoms’ debt levels remain high, saying its adjusted net leverage, including off-balance-sheet adjustment, remained elevated at 6.3 times EBITDA in the September quarter. It compares to 6.1 times at year ending March 2017.

Digicel originally planned to hit US$100 million in free cash flow with debt at 5.2 times for its year end, but has now revised it to US$30 million to US$50 million and 5.5 times to 5.7 times by fiscal year 2018. The revision was due mainly to negative hurricane impact and sluggish performance in Papua New Guinea.

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