Blue Label to sell Blue Label Mobile, 3G Mobile to reduce its debt
JSE-listed Blue Label on Wednesday announced that it would sell its interest in Blue Label Mobile Group to investment holding company DNI 4PL Contracts, which would also acquire Blue Label subsidiary The Prepaid Company's (TPC's) interest in 3G Mobile.
The company said the transactions were aimed at deleveraging the business to "ensure a more robust and liquid balance sheet".
In respect of the Blue Label Mobile Group, DNI will pay Blue Label an initial R350-million, plus R100-million, which will escalate at the prime rate of interest plus 2% from the fifth business day after the date on which all suspensive conditions are met and the date upon which the Cell C board resolves that the mobile operator passes the solvency and liquidity test set out in the Companies Act.
The purchase consideration will also include all amounts paid by Blue Label Mobile in respect of its acquisition of 50% of the issued ordinary shares of Hyve Mobile and Mobile Content Africa.
Further, DNI will pay R544-million for TPC's shares in 3G Mobile.
The proceeds from the two transactions will be used to reduce Blue Label's interest-bearing debt.
Blue Label holds a 45% interest in mobile operator Cell C and has come under fire from shareholders, given Cell C's high debt burden.
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