Cell C's 11% '15 subordinated bonds rose 10 points to the high 90s after its majority owner, Oger Telecom, announced an initial public offering, according to a dealer. Its senior 8 5/8% '12 bonds also rose a few points to 101. Cell C has $270 million of subordinated bonds and e400 million of senior secured bonds.
Cell C is South Africa's third largest mobile network operator. It is 100% owned by holding company 3C Telecommunications, which in turn is owned by Oger Telecom, a division of Saudi Oger. Based in Riyadh, Saudi Arabia, Saudi Oger is a private company owned by the Rafic Hariri family. An official at Cell C could not be reached.
In July, Moody's Investors Service downgraded Cell C's corporate family rating and secured notes to B3 from B2 and its subordinated notes to Caa2 from Caa1. The downgrades were due to weakness in the company's business and financial profile. This stemmed from high competition in the South African market and pressure on operating margins resulting from increases in commissions and incentives to grow market share. This has weakened debt protection levels and exposed Cell C's creditors to potentially higher default risk and lower expected recoveries, according to Moody's. A call to Muhieddine Ghalayini, cfo of Cell C, was not returned. An official at Oger Telecom could not be reached.