The bonds of South African mobile network provider Cell C dropped then rebounded after its parent company, Oger Telecom, withdrew its initial public offering last Tuesday. Its 11% '15 bonds had fallen six points to 90 after it announced the withdrawal, but then rebounded to 96-98 after investors saw the bonds as a buying opportunity. Its 8 5/8% '12 notes fell two points and then rounded a point to 99-100.
A trader said it is rumored Oger Telcom, based in Dubai, United Arab Emirates, will do a private placement with an investor to shore up Cell C's finances instead of the IPO. Proceeds from the IPO were going to be used to financially support Oger Telecom subsidiaries, including Cell C, South Africa's third largest mobile phone network operator. "Oger was only going to do a small IPO so the cash impact was not going to be great," said the trader. "People are thinking Oger has plenty of liquidity." The $1.25 billion IPO, which was intended to boost liquidity, was oversubscribed, according to a company release. Cell C's U.S. dollar-denominated bonds rose 10 points in October after Oger Telecom announced it would financially support Cell C through an IPO (CIN, 10/30).
Oger pulled its IPO because of volatile market conditions in the Middle East and North Africa. In a release it said, "The company believes that given the present market conditions, especially the volatility in the Middle East, an IPO at this point in time could lead to pressure on the share price in the secondary market." Oger Telecom added it always saw the IPO as an option not a necessity. A call to a Cell C spokeswoman was not returned. Officials at Oger Telecom also did not return a call by press time.