JSE-listed Blue Label’s shares plunged on Tuesday after it announced embattled mobile operator Cell C’s default on the interest payment of a multibillion-rand note.

The payment of interest on the $184-million, or about R2.7-billion, loan was due in December 2019, while interest and capital repayments related to the respective bilateral loan facilities between Cell C and Nedbank, China Development Bank Corporation, the Development Bank of Southern Africa and the Industrial and Commercial Bank of China were due this month.

Cell C notified its noteholders that is has defaulted on the payment of interest, sending the shares of its largest shareholder, Blue Label, falling by nearly 13% to a low of R2.75 apiece on Tuesday.

“Currently, none of the bilateral loan facilities have been accelerated as noteholders are aware and support that Cell C is committed to resolving the situation by agreeing to restructuring terms with its lenders while it also continues to work proactively with all stakeholders to improve its liquidity, debt profile and long-term competitiveness,” Blue Label’s statement outlined.

Cell C continues to work proactively with all stakeholders to improve its liquidity, debt profile and long-term competitiveness as part of its turnaround strategy, Cell C added in an update to noteholders.

In a separate statement, Cell C said its S&P Global status on certain loan facilities and senior secured bonds remains unchanged at D (Default).

“The suspension of payments is part of the wider Cell C initiatives to improve liquidity and to restructure the company’s balance sheet,” Cell C CEO Douglas Craigie Stevenson assured shareholders.

The group reiterated the efficiencies to be derived from its extended roaming agreement with MTN to better control its capital expenditure and operating costs.

“This agreement will drive efficiencies in the delivery of services to consumers and supports South Africa’s policy goals of avoiding network duplication.”

The expanded roaming agreement together with a recapitalisation transaction are part of Cell C’s turnaround strategy.