EX-99.T3C 10 dp127775_ex-t3e.htm EXHIBIT T3E

Exhibit T3E

 

THIS EXPLANATORY STATEMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

 

This Explanatory Statement does not constitute an offer to sell or the solicitation of an offer to buy any securities. None of the securities referred to in this Explanatory Statement may be sold, issued or transferred in any jurisdiction in contravention of applicable law. The securities proposed to be issued pursuant to the Scheme will not be registered with the U.S. Securities and Exchange Commission (“SEC”) under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or the securities law of any state or other jurisdiction, and are being transferred and delivered in reliance upon certain exemptions from the registration requirements of the Securities Act.

 

EXPLANATORY STATEMENT IN RELATION TO A SCHEME OF ARRANGEMENT

between

digicel group one limited

 

(in provisional liquidation)

and

 

the dgl1 Scheme Creditors

(as defined in this Explanatory Statement)

 

in the supreme court of bermuda
under section 99 of the Companies Act 1981

 

DATE: May 15, 2020

 

THIS EXPLANATORY STATEMENT COMPRISES AN EXPLANATORY STATEMENT IN COMPLIANCE WITH SECTION 99 AND SECTION 100(1)(a) OF THE COMPANIES ACT 1981 OF BERMUDA (this “Explanatory Statement”).1 It is being sent to persons who are believed to be holders of the Existing Notes as of the date of this Explanatory Statement. If you have assigned, sold, or otherwise transferred, or assign, sell or otherwise transfer, any part of your interest in the Existing Notes, before the Record Date, you must forward this Explanatory Statement and the accompanying documents at once to the person or persons to whom you have assigned, sold or otherwise transferred, or assign, sell or otherwise transfer, such interest.

 

 

The Bermuda Court has ordered that the Company be at liberty to convene a Scheme Meeting of DGL1 Scheme Creditors for the purposes of voting on the Scheme. The Record Date for the Scheme will be close of business (New York time) on May 13, 2020. The Scheme Meeting for DGL1 Scheme Creditors to consider and vote on the Scheme will be 9:00 a.m. Bermuda time / 8.00 a.m New York Time on June 1, 2020. The Scheme Meeting will be via conference call using the following details: +1 917-933-2314 (US), +44 20 3787 4277 (UK), Conference ID: 569 450 771#. The notice convening the Scheme Meeting is set out at Appendix 3 (Notice of Scheme Meeting) to this Explanatory Statement. Instructions about actions to be taken by all DGL1 Scheme Creditors preceding the Scheme Meeting are set out at Appendix 2 (Ballot Package) to this Explanatory Statement and summarised in the section entitled Summary of Actions to Be Taken by All DGL1 Scheme Creditors of this Explanatory Statement.

 

If you are a DGL1 Noteholder who has not delivered Instructions via the Tender Offer as of the Record Date, you are requested to ensure that you validly complete and submit the appropriate Ballot which is set out in the Instruction Packet in accordance with the instructions therein as soon as possible, whether or not you intend to attend the Scheme Meeting.

 

 

 

1 Unless the context otherwise requires, all capitalised terms used in this Explanatory Statement shall have the meanings set out in Appendix 1 (Definitions and Interpretation) to this Explanatory Statement.

 

 

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If you are in any doubt as to the contents of this Explanatory Statement or the documents that accompany it or what action you should take, you are recommended to seek your own independent financial, legal and tax advice immediately from your financial, legal and/or tax advisor who, if you are taking advice in the United Kingdom, is authorised pursuant to the Financial Services and Markets Act 2000 (as amended, “FSMA”) or by an appropriate regulatory body, or from another appropriately authorised independent advisor if you are in a territory outside the United Kingdom.

 

Further copies of this Explanatory Statement are available to DGL1 Scheme Creditors and can be obtained on the Scheme Website (at https://dm.epiq11.com/Digicel) or by contacting the Information Agent via email to tabulation@epiqglobal.com.

 

Further important information is set out under the sections entitled Important Notice and Important Securities Law Notice on pages 9 to 12 (inclusive) of this Explanatory Statement.

 

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TABLE OF CONTENTS

 

Page

 

Important Notice 4
Important Securities Law Notice 9
Certain Tax Considerations 12
DGL1 Explanatory Statement: Letter From the board of Directors 13
Expected Timetable of Principal Events 23
Summary of Actions to Be Taken by All DGL1 Scheme Creditors 27
Part A Background to the Scheme 31
Part B Overview of the Scheme 37
Part C Overview of the New DGL0.5 Secured Notes and the Restructuring Documents 46
Part D Risk Factors 47
Part E Information on DGL0.5 and Additional Information on the Scheme 50
Part F The Scheme 54
APPENDIX 1 DEFINITIONS AND INTERPRETATION 81
APPENDIX 2 BALLOT PACKAGE 90
APPENDIX 3 NOTICE OF SCHEME MEETING 120
APPENDIX 4 KPMG LIQUIDATION ANALYSIS 122
APPENDIX 5 TENDER OFFER MEMORANDUM 141
APPENDIX 6 BALANCE SHEETS 752

 

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Important Notice

 

Unless the context otherwise requires, all capitalised terms used in this Explanatory Statement shall have the meanings set out in Appendix 1 (Definitions and Interpretation) to this Explanatory Statement. The appendices to this Explanatory Statement form an integral part of it and, unless expressly stated otherwise, references to this Explanatory Statement shall be construed as references to the Explanatory Statement including the appendices to it.

 

Information

 

This Explanatory Statement has been prepared by the Company in connection with a scheme of arrangement under Section 99 of the Bermuda Companies Act, being a scheme between the Company and the DGL1 Scheme Creditors, and has been prepared solely for the purpose of providing information to DGL1 Scheme Creditors in relation to the Scheme.

 

Nothing in this Explanatory Statement or any other document issued with or set out within it should be relied on for any purpose other than for DGL1 Scheme Creditors to make a decision on the Scheme, and DGL1 Scheme Creditors may not reproduce or distribute this Explanatory Statement, in whole or in part, and may not disclose any of the contents of this Explanatory Statement or use any information herein for any purpose other than considering and/or making a decision in respect of the Scheme. In particular and without limitation, nothing in this Explanatory Statement should be relied on in connection with the purchase or acquisition of any interest in the Existing Notes, or any other financial instruments or assets of the Company or any other member of the Group.

 

Nothing contained in this Explanatory Statement shall constitute a warranty, undertaking or guarantee of any kind, express or implied, and nothing contained in this Explanatory Statement shall constitute any admission of any fact or Liability on the part of the Company or any other member of the Group with respect to any asset to which it or they may be entitled or any claim against it or them. Without prejudice to the generality of the foregoing, nothing in this Explanatory Statement or the distribution thereof evidences to any person, or constitutes any admission by the Company or any other member of the Group, that a Liability is owed to any person in respect of any Claim (including without limitation any Scheme Claim) or that any person is or may be a DGL1 Scheme Creditor. The failure to distribute this Explanatory Statement to any DGL1 Scheme Creditor shall not constitute an admission or assertion by the Company that such person is not a DGL1 Scheme Creditor.

 

No person has been authorised by the Company, the Provisional Liquidators, KPMG IE, Epiq Corporate Restructuring, LLC, in its capacities as either the Tender Agent or Information Agent, or Deutsche Bank Trust Company Americas, in its capacities as either as Existing Notes Trustee or New Notes Trustee, to give any information or make any representations concerning the Scheme (including concerning the Company or any other member of the Group) which is inconsistent with this Explanatory Statement and, if made, such representations may not be relied upon as having been so authorised.

 

The information contained in this Explanatory Statement has been prepared by the Company based upon information available to the Company on or before the Latest Practicable Date. The delivery of this Explanatory Statement does not imply that, unless expressly stated otherwise the information herein is correct as at any time subsequent to the date hereof. Save as otherwise agreed, or as required by law, the Company has no obligation whatsoever to update or revise any of the information, forward-looking statements or the conclusions contained herein or to reflect new events or circumstances or to correct any inaccuracies which may become apparent subsequent to the date hereof. To the best of the Company’s knowledge, information and belief, the information relating to the Company contained in this Explanatory Statement is in accordance with the facts and does not omit anything likely to affect the import of such information. The Company has taken all reasonable steps to ensure that this Explanatory Statement contains the information reasonably necessary to enable DGL1 Scheme Creditors to make an informed decision about the effect of the Scheme on them.

 

None of the DGL1 Scheme Creditors, the Ad Hoc Group or their respective Advisors have authorised the content of this Explanatory Statement or any part of it, nor do they accept any responsibility for the accuracy, completeness or reasonableness of the statements contained within it.

 

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In making a decision in respect of the Scheme, each DGL1 Scheme Creditor must rely on its own examination, analysis and enquiry of the Company and the terms of the Scheme including the merits and risks involved. None of the Advisors to the Company, the Provisional Liquidators or the Ad Hoc Group has verified that the information contained in this Explanatory Statement is in accordance with facts and does not omit anything likely to affect the import of such information and each of those persons expressly disclaims responsibility for such information. Each DGL1 Scheme Creditor, by its receipt of any DGL1 Scheme Consideration pursuant to the DGL1 Scheme acknowledges that it has:

 

(a)not relied on: (i) Epiq Corporate Restructuring, LLC, in its capacities as either Tender Agent or Information Agent, or Deutsche Bank Trust Company Americas, in its capacities as either Existing Notes Trustee or New Notes Trustee, the Provisional Liquidators, or KPMG IE (ii) any person affiliated with the Tender Agent or Information Agent, the Provisional Liquidators, or KPMG IE, the Existing Notes Trustee or the New Notes Trustee; or (iii) any of the Company’s Advisors or the Ad Hoc Group or the Ad Hoc Group’s Advisors in connection with any investigation of the accuracy of any information contained in this Explanatory Statement or its investment decision (including any decision in connection with the Scheme); and

 

(b)relied only on the information contained or incorporated in this Explanatory Statement and the Tender Offer Memorandum.

 

This Explanatory Statement has not been reviewed, verified or approved by any rating agency or any regulatory authority. Without prejudice to the representations or warranties given by the Company or any other member of the Group or any directors or officers of any member of the Group elsewhere, to the fullest extent permitted by law, neither the Company nor any other member of the Group nor any Personnel of the Company or any other member of the Group will have any tortious, contractual or any other Liability to any person in connection with the use of this Explanatory Statement and the Company and all other members of the Group do not accept any Liability whatsoever to any person, regardless of the form of action, for any lost profits or lost opportunity, or for any indirect, special, consequential, incidental or punitive damages arising from any use of this Explanatory Statement, its contents or preparation or otherwise in connection with it, even if the Company or other member of the Group (as applicable) has been advised of the possibility of such damages.

 

For the avoidance of doubt, to the extent that this Explanatory Statement makes reference to or includes representations and warranties, such representations and warranties are not made by Provisional Liquidators and the Provisional Liquidators shall have no Liability or responsibility whatsoever for any such representations and warranties.

 

Tax

 

In view of the number of different jurisdictions where tax laws may apply to DGL1 Scheme Creditors, this Explanatory Statement does not discuss the tax consequences for DGL1 Scheme Creditors arising from the implementation of the Scheme other than the limited information incorporated by reference from the Tender Offer Memorandum. DGL1 Scheme Creditors are liable for their own taxes and have no recourse to the Company, the Provisional Liquidators, the Tender Agent, Information Agent, the Existing Notes Trustee or the New Notes Trustee or any other entity or person named in this Explanatory Statement with respect to taxes arising in connection with the Scheme.

 

DGL1 Scheme Creditors who are in any doubt as to the effect of implementation of the Scheme are urged to consult their own professional advisors regarding the possible tax consequences under the laws of the jurisdictions that apply to them.

 

Electronic Form

 

If this Explanatory Statement has been sent to you in an electronic form, you are reminded that documents transmitted via this medium may be altered or changed during the process of transmission and consequently none of the Company, the Provisional Liquidators, the Information Agent or any person who controls, or is Personnel or an Affiliate of any such person accepts any Liability or responsibility whatsoever in respect of any difference between the Explanatory Statement distributed to you in electronic format and the hard copy version available to you on request from the Information Agent.

 

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You are reminded that the Explanatory Statement has been delivered to you on the basis that you are a person into whose possession it may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not, nor are you authorised to, deliver the Explanatory Statement or any part of it to any other person other than to a person or persons to whom you have assigned, sold or otherwise transferred any part of your interest in the Existing Notes before the Record Date. If you are not the named addressee to whom the Explanatory Statement has been delivered, please notify the sender immediately and destroy the Explanatory Statement delivered to you.

 

Restrictions

 

The distribution of this Explanatory Statement and the offer or sale of New DGL0.5 Secured Notes may be restricted by law in certain jurisdictions. The Company does not represent that this Explanatory Statement may be lawfully distributed in compliance with any applicable registration or other requirements in any such jurisdiction, or pursuant to an exemption available thereunder, or assume any responsibility for facilitating such distribution.

 

The distribution of this Explanatory Statement to may be restricted by law or regulation in certain jurisdictions and persons into whose possession this Explanatory Statement comes are requested to inform themselves about, and to observe, any such restrictions. Failure to comply with any such restrictions could result in a violation of the laws of such jurisdictions.

 

Summary Only

 

The summary of the principal provisions of the Scheme contained in this Explanatory Statement is qualified in its entirety by reference to the Scheme itself, the full text of which is set out in Part F (The Scheme) of this Explanatory Statement. Each DGL1 Scheme Creditor is advised to read and consider carefully the full text of the Scheme. This Explanatory Statement has been prepared solely to assist DGL1 Scheme Creditors in respect of voting on the Scheme.

 

IN THE EVENT OF A CONFLICT BETWEEN THE INFORMATION AND TERMS DESCRIBED IN THIS EXPLANATORY STATEMENT AND THE SCHEME, THE TERMS OF THE SCHEME SHALL PREVAIL.

 

Prospectus

 

This Explanatory Statement is not a prospectus within the meaning of Article 5.3 of the Prospectus Regulation, or a prospectus equivalent document.

 

Forward Looking Statements

 

Nothing in this Explanatory Statement shall be deemed to be a forecast, projection or estimate of the future financial performance of the Company, any member of the Group, except where otherwise specifically stated.

 

This Explanatory Statement contains various forward-looking statements that reflect management’s current views with respect to future events and anticipated financial and operational performance. The words “expect,” “estimate,” “believe,” “project,” “anticipate,” “should,” “intend,” “probability,” “risk,” “may,” “target,” “goal,” “objective” and similar expressions or variations on such expressions are considered forward-looking statements. Other forward-looking statements can be identified in the context in which the statements are made. These statements appear in a number of places throughout the document. These statements concern, among other things:

 

·strategies, outlooks and growth prospects;

 

·new products and services;

 

·future plans and potential for future growth;

 

·trends affecting the Group’s financial condition or results of operations;

 

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·liquidity, capital resources and capital expenditure;

 

·growth in demand for the Group’s services;

 

·economic outlook and industry trends;

 

·development of the Group’s markets;

 

·the impact of regulatory initiatives and the supervision and regulation of the telecommunications markets in general;

 

·political instability in the markets in which the Group operates;

 

·operating risks, including natural disasters;

 

·outbreaks of disease, such as the COVID-19 pandemic;

 

·possible renewal of licenses;

 

·competition in areas of the Group’s business; and

 

·plans to launch new networks, products and services.

 

Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties; actual results may differ materially as a result of various factors. These factors include, but are not limited to:

 

·general economic conditions, the fluctuations or devaluations of local currencies, government and regulatory policies and business conditions in the markets served by the Group and in markets in which the Group seeks to establish operations;

 

·telecommunications usage levels, including traffic and customer growth;

 

·competitive forces, including price pressures, technological developments and the Group’s ability to retain market share in the face of competition from existing and new market entrants;

 

·disruption of supplies and services from principal suppliers;

 

·regulatory developments and changes, including with respect to the level of tariffs, the terms of interconnection, customer access and international settlement arrangements and the outcome of litigation related to regulation and regulatory processes generally;

 

·the success of business, operating and financial initiatives, the level and timing of the growth and profitability of new initiatives, start-up costs associated with entering new markets and launching new services, subscriber acquisition costs, costs of handsets and other equipment, the successful deployment of new systems and applications to support new initiatives and local conditions;

 

·the availability, terms and use of capital, the impact of regulatory and competitive developments on capital outlays, the ability to achieve cost savings and realize productivity improvements, and the success of the Group’s investments, ventures and alliances;

 

·The Group’s ability to complete the transactions contemplated by the Scheme and described in this Explanatory Statement; and

 

·other factors discussed under “Risk Factors.”

 

DGL1 Scheme Creditors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the Latest Practicable Date, as actual results could differ. Neither the Company nor the Provisional Liquidators undertake any obligation to release publicly the result of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof, including,

 

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without limitation, changes in its business or acquisition strategy or planned capital expenditures, or to reflect the occurrence of unanticipated events.

 

Risk factors

 

DGL1 SCHEME CREDITORS’ ATTENTION IS DRAWN TO CERTAIN RISKS ASSOCIATED WITH THE SCHEME THAT ARE SET OUT OR REFERRED TO IN PART D (RISK FACTORS) OF THIS EXPLANATORY STATEMENT.

 

Legal, tax and financial advice

 

DGL1 Scheme Creditors should not construe the contents of this Explanatory Statement as legal, tax or financial advice.

 

This Explanatory Statement has been prepared without taking into account the objectives, financial situation or needs of any particular recipient of it, and consequently, the information contained in this Explanatory Statement may not be sufficient or appropriate for the purpose for which a recipient might use it. Any such recipients should conduct their own due diligence and consider the appropriateness of the information in this Explanatory Statement having regard to their own objectives, financial situations and needs. DGL1 Scheme Creditors are recommended to consult their own professional advisors as to legal, tax, financial or other matters relevant to the action DGL1 Scheme Creditors should take in relation to the Scheme, or the implications/consequences of those actions.

 

DGL1 Scheme Creditors should consult their own professional advisors with respect to the matters described in this Explanatory Statement, including the legal, financial and tax consequences of the Scheme in their particular circumstances.

 

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Important Securities Law Notice

 

THIS EXPLANATORY STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITY IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO DO SO.

 

NONE OF THE SECURITIES REFERRED TO IN THIS EXPLANATORY STATEMENT SHALL BE SOLD, ISSUED OR TRANSFERRED IN ANY JURISDICTION IN CONTRAVENTION OF APPLICABLE LAW.

 

General

 

The distribution of this Explanatory Statement and the offering, sale or delivery of the DGL1 Scheme Consideration are subject to restrictions and may not be made except pursuant to registration with or authorisation by the relevant securities regulatory authorities or an exemption therefrom. Therefore, persons who may come into possession of this Explanatory Statement are advised to consult with their own legal advisors as to what restrictions may be applicable to them and to observe such restrictions. This Explanatory Statement may not be used for the purpose of an offer or invitation in any circumstances in which such offer or invitation is not authorised.

 

No action has been or will be taken in any jurisdiction by the Company or DGL0.5 that would or is intended to permit a public offering, or any other offering under circumstances not permitted by applicable law, of the DGL1 Scheme Consideration. Persons into whose hands this Explanatory Statement comes are required by the Company and DGL0.5 to comply with all applicable laws and regulations in each country or jurisdiction in which they purchase, offer, sell or deliver DGL1 Scheme Consideration or have in their possession, distribute or publish this Explanatory Statement or any other materials relating to the DGL1 Scheme Consideration, in all cases at their own expense.

 

DGL1 Scheme Creditors who are citizens or residents of the United States should consult their own legal, financial and tax advisors with respect to the legal, financial and tax consequences of the Scheme in their particular circumstances.

 

U.S. Securities Law Considerations

 

None of the DGL1 Scheme Consideration has been or will be registered under the Securities Act or with any securities regulatory authority of any state of the United States.

 

The DGL1 Scheme Consideration will be issued in reliance upon the exemption from the registration requirements of the Securities Act provided by section 3(a)(10) thereof. No public offering of such securities will be made in the United States. For the purpose of qualifying for the exemption from the registration requirements of the Securities Act provided by section 3(a)(10) thereof with respect to such securities that may be issued pursuant to the Scheme, the Bermuda Court has been advised that its sanctioning of the Scheme will be relied upon as an approval of the Scheme following a hearing on its fairness to security holders at which hearing all such security holders are entitled to attend in person or through counsel to support or oppose the sanctioning of the Scheme and with respect to which notification has been given to all such security holders. Such transaction will not be approved or disapproved by the U.S. Securities and Exchange Commission (the “SEC”), nor will the SEC or any U.S. state securities commission pass upon the merits or fairness of the transaction nor upon the adequacy or accuracy of the information contained in this Explanatory Statement. Any representation to the contrary is a criminal offence in the United States. The information disclosed in this Explanatory Statement is not the same as that which would have been disclosed if this Explanatory Statement had been prepared for the purpose of complying with the registration requirements of the Securities Act or in accordance with the laws and regulations of any state or other jurisdiction of the United States.

 

None of the DGL1 Scheme Consideration will be listed on a U.S. securities exchange or with any inter-dealer quotation system in the United States. The Company and DGL0.5 (as applicable) do not intend to take action to facilitate a market in any of the DGL1 Scheme Consideration in the United States. Consequently, the Company and DGL0.5 (as applicable) believe that it is unlikely that an active trading market in the United States will develop for any such securities.

 

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Neither the SEC nor any U.S. federal, state or other securities commission or regulatory authority has registered, approved or disapproved any of the DGL1 Scheme Consideration or passed upon the accuracy or adequacy of this Explanatory Statement. Any representation to the contrary is a criminal offence in the United States.

 

Securities Law Considerations for Certain Other Jurisdictions

 

European Economic Area

 

The New DGL 0.5 Secured Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area (“EEA”) or the United Kingdom (“UK”). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU  (as amended, “MiFID II”); (ii) a customer within the meaning of Directive (EU) 2016/97 (as amended), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Regulation (EU) 2017/1129 (as amended, the “Prospectus Regulation”). Consequently no key information document required by Regulation (EU) No 1286/2014 (as amended, the “PRIIPs Regulation”) for offering or selling the New DGL 0.5 Secured Notes or otherwise making it available to retail investors in the EEA or in the UK has been prepared and therefore offering or selling the DGL1 Scheme Consideration or otherwise making it available to any retail investor in the EEA or in the UK may be unlawful under the PRIIPS Regulation. This Explanatory Statement has been prepared on the basis that any offer of New DGL0.5 Secured Notes in any Member State of the EEA will be made pursuant to an exemption under the Prospectus Regulation from the requirement to publish a prospectus for offers of the DGL1 Scheme Consideration. This Explanatory Statement is not a prospectus for the purposes of the Prospectus Regulation.

 

References to Regulations or Directives include, in relation to the UK, those Regulations or Directives as they form part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 or have been implemented in UK domestic law, as appropriate.

 

The above selling restriction is in addition to any other selling restrictions set out below.

 

United Kingdom

 

This Explanatory Statement has not been approved by an authorised person for the purposes of Section 21 of the FSMA. Accordingly, this Explanatory Statement is not being distributed to, and must not be passed on to, the general public in the United Kingdom. This Explanatory Statement is for distribution only to persons who: (i) have professional experience in matters relating to investments and who qualify as investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the “Financial Promotion Order”), (ii) are persons falling within Article 49(2)(a) to (d) (“high net worth companies, unincorporated associations etc.”) of the Financial Promotion Order, (iii) are outside the United Kingdom, or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of Section 21 of FSMA) in connection with the issue or sale of any securities may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as “relevant persons”). This Explanatory Statement is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this document relates is available only to relevant persons and will be engaged in only with relevant persons.

 

Bermuda

 

The DGL1 Scheme Consideration may not be marketed, offered or sold directly or indirectly to the public in Bermuda except in accordance with Bermuda law, and neither this Explanatory Statement, which is not subject to and has not received approval from either the Bermuda Monetary Authority or the Bermuda Registrar of Companies, and no statement to the contrary, explicit or implicit, is authorised to be made in this regard, nor any offering material or information contained herein relating to the DGL1 Scheme Consideration, may be supplied to the public in Bermuda or used in connection with any offer for the subscription or sale of DGL1 Scheme Consideration to the public in Bermuda except in accordance with Bermuda law. The completion of the Scheme is not calculated to result, directly or indirectly in the DGL1 Scheme Consideration becoming available to persons other than persons whose ordinary business involves the acquisition, disposal or holding of shares (as defined in section 25 of the Bermuda Companies Act), whether as principal or agent.

 

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Canada

 

The DGL1 Scheme Consideration may be offered or sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the DGL1 Scheme Consideration must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

 

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this Explanatory Statement (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.

 

Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the purchasers are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this Explanatory Statement.

 

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Certain Tax Considerations

 

DGL1 Scheme Creditors are directed to the section of the Tender Offer Memorandum (attached at Appendix 5) entitled “Material Bermuda and U.S. Tax Considerations” which is hereby incorporated by reference.

 

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DGL1 Explanatory Statement: Letter from the board of directors

 

Dear DGL1 Scheme Creditors

 

Background

 

The Group enjoys a strong market position across the 312 telecommunications markets in which it operates. The Group’s revenues for the year ended March 31, 2019, was approximately $2.3 billion, with an operating profit of approximately $479.0 million. However, in recent years the Group has seen significant reductions in voice revenues, which are largely due to the industry-wide trend of voice services being substituted by data usage by mobile subscribers. The growth of data revenues and revenues from other related services such as business solutions and Cable TV & Broadband has not been sufficient to offset the decline in voice revenues. In addition, the expansion into business solutions and Cable TV & Broadband has required significant capital expenditures, which have reduced the Group’s ability to generate operating free cash flow and reduce its finance costs. Further, mobile operators have seen increased competitive pressures and reductions in mobile termination rates, which have negatively impacted their businesses, and these factors are also prevalent in the Group’s markets. Accordingly, the Group finds itself with unsustainable volumes of funded indebtedness. The Group’s total outstanding funded debt was approximately $7.4 billion as of September 30, 2019. The Group’s annual finance costs (which are comprised primarily of interest payments on its outstanding funded debt) for the year ended March 31, 2019 was $558.4 million, contributing to the Group’s loss before taxation of approximately $154.7 million for the same period. This represented a year-on-year increase in finance costs of approximately $55.4 million, which in turn contributed to a more than doubling of the Group’s loss before taxation of $70.2 million in the same period for the preceding year.

 

In response, the Group has been exploring strategic transactions to reduce its total level of funded indebtedness, manage near-term maturities and improve liquidity through reduced finance costs. In January 2019, the Company and its immediate shareholder, Digicel Group Two Limited, which are together two immediate holding companies of the Company, completed exchange offers in respect of approximately $3 billion of indebtedness, whereby debt due to mature in 2020 was exchanged for new indebtedness with maturities in 2022 and 2024. Despite this, the Group continues to have over $1 billion in debt due to mature next year. The Group therefore faces the need to either repay or refinance approximately $4 billion in debt over the near-to-medium term.

 

In this context, the Group has determined it is appropriate to propose a more comprehensive restructuring of its existing indebtedness. In furtherance of this objective, the Group entered into discussions with the Ad Hoc Group at the beginning of 2020. The discussions resulted in a transaction proposal that, if fully implemented would reduce the Group’s total debt by approximately $1.7 billion, reduce its annual cash interest payments by approximately $125 million and extend maturities. Consummation of this transaction is key to the long-term sustainability of the Group as it will place the Group on a more stable financial footing, and providing both the Company and wider Group more flexibility in accessing future financing in order for the Group to maintain competitiveness, investment and innovation in the markets in which they operate. Members of the Ad Hoc Group representing approximately $1.5 billion of the Exchange Notes have signed a Lockup and Support Agreement in support of the proposed Restructuring.

 

Like other companies throughout the world, the Group is addressing the likely consequences arising from the outbreak of COVID-19. The Group anticipates its business to be negatively impacted by the COVID-19 pandemic. The financial impact of the COVID-19 pandemic will cause a negative impact from the start of the first quarter of fiscal 2021 (being April to June 2020). The financial impact of the COVID-19 pandemic on the Group is difficult to quantify at this time because it is dependent on external factors, such as the length of restrictions within the Group’s operating markets and the resultant impact on the wider economies in such markets.

 

In response to the current uncertain economic outlook and the need to preserve liquidity in light thereof, the Group elected to not make interest payments on the following debt and to instead utilize a 30-day grace period permitted under the relevant indentures: the Existing Notes that were due on March 30, 2020, the Existing DGL2 2022 Notes that were due on March 30, 2020 and the Existing DGL2 2024 Notes that were due on April

 

 

 

2 Thirty-one mobile markets does not include the Group’s operations in Panama and operations in La Réunion where the Group provides business solutions services

 

 

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1, 2020. Skipping these interest payments has provided a total cash flow benefit to the Group of $115 million approximately, which has eased short-term liquidity pressure.

 

However, in light of the risks described further below in “Alternatives to the Restructuring,” the Group sought to negotiate a comprehensive solution that could be consummated in the near-term to right-size its capital structure and position the members of the Group, including the Company, to meet their respective restructured debt service obligations in the ordinary course.

 

On April 1, 2020, certain members of the Group announced the commencement of offers to exchange existing debt of the Company, DL and DGL2 for various new securities.

 

With respect to the Existing Notes, DGL0.5 (a newly formed holding company that will own all of the Company’s current subsidiaries and other assets upon consummation of the Scheme) offered to exchange the Existing Notes held by Eligible Holders for up to an aggregate principal amount of $941 million of newly issued notes due 2024 to be issued by DGL0.5 (the “New DGL0.5 Secured Notes”).

 

With respect to the Existing DGL2 Notes, DGL0.5 offered to exchange (i) any and all of the outstanding approximately $937.15 million aggregate principal amount of DGL2’s 8.250% Senior Notes due 2022 held by Eligible Holders for (x) up to an aggregate principal amount of $300 million of newly issued notes due 2025 to be issued by DGL0.5 and (y) up to an aggregate principal amount of $50 million of newly issued 7.00% PIK Perpetual Convertible Notes to be issued by DGL0.5 and (iii) any and all of the outstanding $993 million aggregate principal amount of DGL2’s 9.125% Senior Notes due 2024 held by Eligible Holders for (x) up to an aggregate principal amount of $100 million of New DGL0.5 Unsecured Notes and (y) up to an aggregate principal amount of $150 million of Perpetual Convertible Notes.

 

Additionally, in the case of existing DL Notes, DL, Digicel Holdings (Bermuda) Limited and DIFL offered to exchange any and all of the outstanding $1.3 billion aggregate principal amount of DL’s 6.00% Notes due 2021 held by Eligible Holders for an option of either (x) up to an aggregate principal amount of $626.6 million of Additional DIFL Secured Notes, (y) up to an aggregate principal amount of $317.2 million of senior unsecured notes due 2025, to be co-issued by Digicel Holdings (Bermuda) Limited and DIFL (the “New DIFL Unsecured Notes”) and (z) up to an aggregate principal amount of $256.1 million of subordinated notes due 2026, to be co-issued by Digicel Holdings (Bermuda) Limited and DIFL and (ii) DL offered to exchange any and all of DL’s outstanding $925 million aggregate principal amount of its 6.75% Notes due 2023 held by Eligible Holders for up to an aggregate principal amount of $878.8 million of new senior unsecured notes due 2027 to be issued by DL.

 

As described in more detail in the Tender Offer Memorandum, upon tendering their respective Existing Notes, DGL1 Noteholders automatically and unconditionally delivered instructions for the Tender Agent, effective immediately, to appoint the Tender Agent as their true and lawful agent, attorney-in-fact and proxy, to take all steps necessary and execute all documentation necessary to irrevocably vote in favour (including, if required, attending a meeting and voting on behalf of such tendered Existing Notes) of a scheme of arrangement providing substantially the same or better economic terms (as determined by the Tender Agent in its discretion acting in good faith) as the exchanges proposed in respect of the Existing Notes in the Tender Offer. As of the date of this Explanatory Statement, holders of approximately 98.6% in principal amount of the Existing Notes have tendered their Existing Notes, and in turn, have delivered Instructions to vote in favour of the Scheme (because the Scheme is on substantially the same or better economic terms to the DGL1 Noteholders as those terms set forth in the Tender Offer Memorandum).

 

Although exchanges have been proposed at different levels throughout the Group’s current capital structure, the board of directors of each company has separately considered the relevant company’s position. The proposed Scheme is between Digicel Group One Limited and the DGL1 Scheme Creditors, and, as explained further below, the transaction to be implemented via the Scheme reflects the expected level of support for a restructuring of the Company’s indebtedness. The Board believes the Scheme to be in the best interests of the creditors of the Company.

 

The Proposed Restructuring

 

The Company is not an operating company. Its main assets consist of interests in its subsidiaries and certain receivables from other companies in the Group. The Company has engaged KPMG IE to perform a valuation

 

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and liquidation analysis to determine whether the Company’s current assets would, on a theoretical liquidation, be sufficient to satisfy its existing creditors, who are predominately the holders of the Existing Notes, in full.

 

The results of this valuation exercise confirmed the view of the Board that there was a reasonable basis for concluding that the value of the Company’s liabilities exceed the realizable value of its assets and that, without some restructuring of the Company’s existing debt, the Company could face potential insolvency.

 

The Board has therefore explored possibilities of reducing the overall level of the Company’s funded indebtedness and identified the following issues with any potential restructuring:

 

·balancing the risk that too severe of a ‘haircut’ on holders of Existing Notes could result in such holders rejecting any restructuring proposal as commercially unattractive, against the need for any restructuring transaction to be meaningful to the future prospects of the Company through debt and interest expense reduction;

 

·the realizable value of the Company’s main assets, the equity interests in its subsidiaries, was directly impacted by the simultaneous Tender Offers occurring with respect to the Existing DL Notes and there could be no assurance that the amount of creditor participation in the rescheduling of debt occurring at DL and DIFL would be sufficient to materially increase the value of the Company’s equity interest in those subsidiaries or that the Minimum Participation Condition with respect to that Tender Offer would be satisfied; and

 

·the possible need to recapitalize the Company through the injection of fresh equity financing, and the inability of its sole shareholder, Digicel Group Two Limited, to provide such capital due to its own level of indebtedness and liquidity constraints.

 

The Company and its advisors worked with the Ad Hoc Group and the Group’s founder, Denis O’Brien (in such capacity, the “Founder”) with these considerations in mind to develop a transaction that would both protect the interests of creditors of the Company and provide a new, stable capital structure for the Group going forward. The proposed transaction will, as further described below under the heading “Proposed Scheme”, result in significant deleveraging of the Group and will enable DGL0.5 to carry on the business of the Company as a going concern.

 

Following the consummation of the proposed Restructuring, the holders of the Existing DGL2 Notes will have no recourse to any of the assets of the Restructured Group. However, to respect the interests of the holders of the Existing DGL2 Notes as the putative shareholders of the Company, the Company and its Advisors also determined that, as part of the Restructuring, it was appropriate to conduct a tender and exchange offer as mentioned above, whereby holders of the Existing DGL2 Notes would be offered the opportunity to exchange their Existing DGL2 Notes for new unsecured and convertible securities to be issued by DGL0.5, albeit with a greater haircut than that proposed for DGL1 Noteholders. Assuming a 100% participation by DGL1 Noteholders and DGL2 Noteholders (and DL Noteholders), the simplified Group structure following the consummation of the restructuring would be as follows:

 

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1.The chart above depicts DGL0.5’s pro forma simplified corporate structure as of September 30, 2019 after giving effect to the Reorganization Transactions and assuming 100% participation in the Tender Offers and DL Tender Offers, in each case, prior to the applicable early tender date, the Consent Conditions are satisfied and the Founder Equity Contribution has occurred.

 

2.Represents DGL0.5’s consolidated ownership on a fully diluted basis including shares held through DL.

 

3.Does not show minority interests in Caribbean operations or Pacific operations.

 

4.Digicel Pacific Limited will guarantee the New DGL0.5 Secured Notes.

 

Proposed Scheme

 

As of the date of this Explanatory Statement, the Company has commenced the Tender Offer. The Tender Offer is a voluntary process and there is no method of securing 100% participation in the Tender Offer absent all DGL1 Noteholders tendering their Existing Notes. The Scheme is designed to ensure the full implementation of the exchange of the Existing Notes contemplated in the Tender Offer and described in the Tender Offer Memorandum.

 

As a term of the Tender Offer, the Company had the right, but not the obligation, to commence a scheme of arrangement upon receiving acceptance from at least 75% in value of those tendering their Existing Notes. DGL1 Noteholders were also, as part of the Tender Offer, required when tendering their Existing Notes to appoint the Tender Agent as their true and lawful agent, attorney-in-fact and proxy, to take all steps necessary and execute all documentation necessary to irrevocably vote in favor (including, if required, attending a meeting

 

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and voting on behalf such tendered Existing Notes) of a scheme of arrangement providing substantially the same or better economic terms (as determined by the Tender Agent in its discretion acting in good faith) as the exchanges proposed in respect of the Existing Notes in the Tender Offers.

 

Having received acceptances from at least 75% in value of the Existing Notes and with a view to facilitating the Scheme, on April 28, 2020 the Company petitioned for the appointment of Michael Morrison and Charles Thresh of KPMG Advisory Limited and James Bennett of KPMG LLP as joint provisional liquidators of the Company for the purposes of monitoring the Company’s restructuring (the “Provisional Liquidators”) as contemplated by the Scheme3. On April 29, 2020 the Bermuda Court made an order confirming such appointment. The appointment of Provisional Liquidators has secured a stay of proceedings in Bermuda and therefore will allow the Scheme to proceed in an orderly fashion.

 

With the support of its provisional liquidators, the Company has determined to propose the Scheme, the economic terms of which are substantially the same as the Tender Offer and provide for the reconstitution of the Company via the Transfer Mechanics set out therein, which, shall occur through the following steps, each of which is interconditional on the other and each of which shall occur immediately after the proceeding step, such that all steps occur upon the Scheme Effective Date:

 

i)The Existing Notes will be deemed transferred to DGL0.5, a newly incorporated, wholly owned subsidiary of the current indirect shareholder of the Company, Digicel Investments Limited, (“Digicel Investments”, which acts as nominee for the Founder). This transfer will result in DGL0.5 becoming a creditor of the Company in an amount equal to the Company Payable. In consideration for the transfer of the Existing Notes, DGL0.5 shall make available to DTC on the Scheme Effective Date the DGL1 Scheme Consideration for payment to the DGL1 Scheme Creditors through an exchange of the Existing Notes for the New DGL0.5 Secured Notes anticipated to be performed by DTC in accordance with its customary practices and procedures on or as soon as practicable after the Scheme Effective Date.

 

ii)Immediately following (i), the Company will transfer to DGL0.5 substantially all of its assets and liabilities (excluding the Existing Notes which are transferred in (i) above) as shown in the Balance Sheet appended to this Explanatory Statement including,4 without limitation, all of the Company’s intra-Group receivables and payables, all of the Company’s equity interests in its subsidiaries, all of the Company’s cash and, to the extent permitted without consent or to the extent consent is received from the relevant third party, all of the Company’s trade and other payables (but excluding any Third Party Liabilities). Each of the foregoing will occur either pursuant to an order of the Bermuda Court pursuant to section 101 of the Bermuda Companies Act or, if the Bermuda Court does not make such order, will occur pursuant to the contractual mechanism of the Sale Documents. The net value of the assets transferred as described in this paragraph (ii) will create a receivable owed by DGL0.5 in favour of the Company (the “Company Receivable”). The Company Payable from paragraph (i) will be immediately set-off against the Company Receivable (thereby eliminating the Company Receivable) in consideration for the Asset Transfer. The balance owed by the Company in respect of the Company Payable following this set-off is referred to as the DGL0.5 Receivable.

 

iii)Immediately following (ii), the Existing Notes will be cancelled and DGL1 Scheme Creditors will release all of their Scheme Claims. This will have the effect of eliminating any balance on the

 

 

 

 

3Paragraph 1 of the April 29, 2020 order by the Bermuda Court provides that the Provisional Liquidators shall have, amongst other things, the following powers: (i) reviewing the financial position of the Company; (ii) monitoring the continuation of the business of the Company by the Board; (iii) monitoring, consulting with, overseeing and otherwise liaising with the Board and the creditors and shareholders of the Company in determining the most appropriate manner of effecting a reorganization and/or refinancing of the Company; and (iv) if agreed by the Company to be appropriate, to work with the Company to draft a scheme of arrangement under the provisions of section 99 of the Companies Act 1981 between the Company and its creditors and/or shareholders to give effect to and/or to facilitate a reorganization and/or refinancing of the Company and to seek whatever directions are required in respect thereon from the Bermuda Court for proposing and implementing such a scheme.

 

4The effect of this transfer is illustrated in the Pro-Forma Balance Sheet which assumes implementation of the Transfer Mechanics.

 

 

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DGL0.5 Receivable and compromising all Scheme Claims in accordance with the terms of the Scheme (other than Excluded Claims, as further described in the Scheme).

 

The Founder Equity Injection is a Condition Precedent to the above steps occurring, so it is expected that the Founder Equity Injection will be consummated on or around the same day that the steps occur. To the extent any Third Party Liabilities are not transferred to DGL0.5 pursuant to the Transfer Mechanics as summarised above, then the Company shall either procure the transfer of such Third Party Liabilities to DGL0.5 or shall make provision for payment of them in full on or after the Scheme Effective Date.

 

Following the consummation of the above transactions, it is expected that the Company will have no assets and no liabilities and will be liquidated, with the former economic interests of the DGL1 Noteholders now represented by the New DGL0.5 Secured Notes, with DGL0.5 as the new holding company of the Restructured Group.

 

Other Aspects of the Group’s Restructuring

 

Each Tender Offer contained a scheme condition identical to the Scheme Condition in the Tender Offer for the Existing Notes. It is therefore possible that, if either DL or DGL2 receives acceptances from 75% or more of any series of the Existing DL Notes or the Existing DGL2 Notes, a scheme of arrangement may be proposed by the respective company to implement the respective Tender Offer. The Company has no assurance that a scheme of arrangement will be proposed by either DL or DGL2, and the Scheme is not conditional upon the results of either the DL or DGL2 Tender Offers or a scheme of arrangement being successfully consummated by either of those companies. The decision to propose a scheme of arrangement by either DL or DGL2 is a matter to be determined by the board of directors of each respective company.

 

DGL1 Noteholders, as future creditors of DGL0.5 following the consummation of the Restructuring will benefit from any take-up of the Tender Offer (or consummation of any scheme of arrangement) by the DL Noteholders because the transactions contemplated thereby will result in lower gross debt encumbering a company whose creditors are structurally senior to DGL1 Noteholders. Decreased leverage in DL will increase the value of DGL0.5’s equity holdings in DL, and reduce finance costs, thereby unlocking liquidity to service DGL0.5’s debt obligations, including the New DGL0.5 Secured Notes.

 

The Tender Offer by DGL2, as further described in the Tender Offer Memorandum, proposes an exchange of the Existing DGL2 Notes for new unsecured and convertible debt securities to be issued by DGL0.5, subject in each case to a Minimum Participation Condition. Although these unsecured and convertible securities will rank junior to the New DGL0.5 Secured Notes, to the extent DGL0.5 is required to issue new debt securities in satisfaction of the DGL2 Tender Offer, it may negatively impact the free cash flow and asset base of DGL0.5 that would otherwise be available to holders of the New DGL0.5 Secured Notes. Accordingly, DGL1 Noteholders may be adversely affected by the level of take-up of the Tender Offer (or any scheme of arrangement) by DGL2. Despite this, the Company understands that the respective boards of directors of DGL0.5 and DGL2 have determined that, in the interests of achieving a comprehensive restructuring that garners widespread support across the Group’s capital structure, holders of the Existing DGL2 Notes will be offered the opportunity for some economic participation in the Restructured Group’s capital structure, notwithstanding that the Company believes, as confirmed by the valuation and liquidation analysis provided by KPMG IE, that the Existing DGL2 Notes are effectively worthless because DGL2’s main asset, its equity interest in the Company, is valueless due the Company’s overleveraged capital structure and additional senior debt in the Group’s existing capital structure.

 

Alternatives to the Restructuring

 

The proposed Restructuring is the result of extensive, arms-length negotiations with the Ad Hoc Group, with the objective of treating all stakeholders fairly and in accordance with their respective legitimate expectations and following a comprehensive consideration of the strategic options available to the Company. The scope and feasibility of these strategic options have been limited as a result of successive years of net losses and recent unprecedented market turbulence occurring as result of the COVID-19 pandemic, the duration of which remains unclear, as discussed earlier.

 

The Company determined in its business judgment to not make its scheduled interest payment on the Existing Notes on March 30, 2020 to preserve liquidity. As a result, if the Scheme and the Restructuring are not consummated, the Company would be in default on its debt obligations and in the absence of a successful

 

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financial and corporate restructuring, the Provisional Liquidators would recommend to the Bermuda Court that the Company proceed to be wound up on the basis of its insolvency. Such an insolvency process would be value-destructive and detrimental to the Company and all its stakeholders, including the DGL1 Noteholders. The Board does not believe the Company’s existing obligations and liquidity permit enough time to formulate a consensual restructuring solution substantially different from the planned Restructuring and therefore believe the current Scheme and Restructuring represent an outcome to creditors that would be superior to any other option (including liquidation) open to the Company.

 

There are several factors which would negatively impact stakeholders’ recoveries in a liquidation of the Company:

 

(a)the quality and saleability of assets on the balance sheet;

 

(b)the complexity and international geographic scope of the Group;

 

(c)compliance with local laws in the various jurisdictions in which the Group operates;

 

(d)the ability of the liquidator of each Group entity to gain access to funding to facilitate an orderly winding-up;

 

(e)the ability of the liquidator to retain key resources to facilitate the asset sales;

 

(f)the amount of time given by, and cooperation from, creditors and counterparties to organise and conduct asset sales in an orderly manner and at maximum value;

 

(g)the costs incurred in the liquidation process; and

 

(h)any potential claims from counterparties.

 

KPMG IE5, has prepared an analysis of the returns to senior unsecured creditors in a liquidation of the Company which is set out at Appendix 4 (KPMG Liquidation Analysis Report) to this Explanatory Statement (the “KPMG Liquidation Analysis Report”) and has been provided to the Company the basis that reliance shall be limited to the Company only and specifically on the basis that reliance does not extend to any other party including DGL1 Scheme Creditors.

 

The KPMG Liquidation Analysis Report has been prepared by reference to Company financial information as at March 31, 2020. This is the latest practicable date on which the KPMG Liquidation Analysis Report could be prepared given information currently available to the Company (such date, the “Latest Practicable Date”). In preparing the KPMG Liquidation Analysis Report, KPMG IE has relied on representations from the Company to the effect that Scheme Claims would be paid in priority to unsecured creditor claims, on account of liens and pledges in relation to the Company’s s assets, however, there would remain a shortfall to DGL1 Scheme Creditors as the sums derived by the Company from asset realisations would be insufficient to meet the aggregate Scheme Claims.

 

 

 

 

 

 

 

 

 

 

5KPMG IE has given and has not withdrawn its written consent to the issue of this Explanatory Statement with the inclusion of: (i) its name and all references thereto; and (ii) the KPMG Liquidation Analysis Report (which, for the avoidance of doubt, has been provided to the Company on the basis that reliance shall be limited to the Company only and specifically that reliance does not extend to any other party including DGL1 Scheme Creditors) in the form and context in which they are included in this Explanatory Statement. For the purposes of the collateral assessment on which the KPMG Liquidation Analysis Report is based, KPMG IE relied on written representations from the Company regarding the nature and validity of all pledges, liens and security relating to DGL1 Scheme Creditors and KPMG IE was not asked, and did not seek, to verify the validity of such security, nor whether any or all associated charges have been properly registered. Neither KPMG IE nor the Provisional Liquidators have a material interest, whether direct or indirect in the shares of the Company, the shares of any other Company in the Group, nor does either KPMG IE or the Provisional Liquidators have a material economic interest, whether direct or indirect, in the Company or DGL0.5, including an interest in the success of the proposed Restructuring.

 

 

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Based on the KPMG Liquidation Analysis Report, assuming a projected liquidation process of up to three years, the estimated total recovery to DGL1 Scheme Creditors ranges from approximately US$484.7 million to US$629.3 million. This equates to a recovery of between 47% and 60% for DGL1 Scheme Creditors. Please also refer to the Section 6 (Consequences of a Failure to Implement the Scheme) of Part A of this Explanatory Statement (Background to the Scheme) and Appendix 4 (KPMG Liquidation Analysis Report) to this Explanatory Statement for further details.

 

Based on the information currently available regarding the quantum of the Scheme Claims it is anticipated that DGL1 Scheme Creditors will recover approximately 94% in aggregate value of the face amount of their Scheme Claims upon payment in full of the New DGL0.5 Secured Notes at maturity (excluding any accrued but unpaid interest). For the purpose of determining notional recoveries to the DGL1 Scheme Creditors, the Board has not ascribed any value to the interest payable under the New DGL0.5 Secured Notes. For further detail on DGL1 Scheme Creditor recoveries, please also refer to “Outcomes for DGL1 Scheme Creditors if the Scheme is Sanctioned”.

 

Therefore, the Board considers, having consulted with its advisors, that the recoveries for DGL1 Scheme Creditors provided pursuant to the Scheme are greater than otherwise recoverable in a liquidation of the Company, as demonstrated by the KPMG Liquidation Analysis Report.

 

Process for Voting on and Implementation of the Scheme

 

The process for voting on and implementing of the Scheme is summarised in the following paragraphs:

 

(a)If you have already validly tendered your Existing Notes and delivered the Instructions as required by the terms of the Tender Offer

 

No further action is required at this time. The delivery of the Instructions by you or on your behalf by your commercial bank, broker, dealer, trust company or other nominee immediately following the tender of such Existing Notes via ATOP will have constituted the Tender Agent as your agent and attorney-in-fact, and the Tender Agent will include your vote on the Agent Master Ballot to appoint the Chairman of the Scheme Meeting as your proxy to vote your Scheme Claims in favor of the Scheme.

 

(b)If you have NOT yet tendered your Existing Notes in the Tender Offer and delivered the Instructions

 

As of the Record Date, you may no longer vote your Existing Notes using the procedures described in the Tender Offer Memorandum. To vote in the Scheme you must either attend the Scheme Meeting or complete the applicable Ballot: please refer to the detailed instructions in relation to voting at the Scheme Meeting in the section entitled Summary of Actions to be Taken by all DGL1 Scheme Creditors and Appendix 2 (Ballot Package) to this Explanatory Statement.

 

To the extent you have not provided any Instructions via the Tender Offer as of the Record Date, in order to vote on the Scheme at the Scheme Meeting you must either attend the Scheme Meeting in person (or by your duly authorized representative) or provide the appropriate Ballot to the Information Agent before the Voting Instruction Deadline (being 5 p.m. (New York Time) on May 28, 2020) in order for the relevant DGL1 Scheme Creditor to vote at the Scheme Meeting.

 

If the requisite thresholds of DGL1 Scheme Creditors at the Scheme Meeting do not approve the Scheme, then the Company will not be able to implement the Scheme. See “Consequences of a Failure to Implement the Scheme” on page 36.

 

DGL1 Scheme Consideration

 

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The DGL1 Scheme Consideration consists solely of the New DGL0.5 Secured Notes, with the New DGL0.5 Secured Notes being allocated pro rata to a DGL1 Noteholders based of their holdings of Existing Notes.

 

Approval Thresholds for the Scheme

 

In order for the Scheme to be considered by the Bermuda Court at the Scheme Sanction Hearing, the Scheme must be approved by a majority in number representing at least 75% in value of Existing Notes held by the DGL1 Scheme Creditors present and voting either in person or by proxy at the Scheme Meeting.

 

Scheme Sanction Hearings

 

Under Section 99 of the Bermuda Companies Act, a Bermuda scheme of arrangement becomes effective in accordance with its terms and is binding on the relevant company and all its creditors when the order of the Bermuda Court sanctioning the scheme of arrangement is delivered to the Bermuda Registrar of Companies. The Company expects that the Scheme Sanction Hearing in respect of the Scheme will take place on or about June 8, 2020. Once the date of the Scheme Sanction Hearing is confirmed by the Bermuda Court, the Company will provide notice of it to the DGL1 Scheme Creditors.

 

At the Scheme Sanction Hearing, the Company also intends to make an application pursuant to section 101 of the Bermuda Companies Act to implement the Asset Transfer from the Company to DGL0.5. Section 101 of the Bermuda Companies Act permits a company, in conjunction with a scheme of arrangement, to receive an order either as part of the sanction of the scheme or by a subsequent order, that makes provision for the whole or part one company’s undertaking, property and liabilities to transfer to another transferee company. If such an order is not granted, the Company intends to effect the Asset Transfer by the Sale Documents.

 

Scheme Effective Date and Distribution Date

 

As soon as reasonably practicable after receiving the Sanction Order, the Company intends to deliver the Sanction Order to the Bermuda Registrar of Companies, thereby causing the Scheme Effective Date to occur, subject to the satisfaction of all Conditions Precedent which include the entry of an order by the U.S. Bankruptcy Court pursuant to Chapter 15 of the U.S. Bankruptcy Code that recognises and enforces the Scheme. The Company will notify the DGL1 Scheme Creditors of the occurrence of the Scheme Effective Date.

 

The Company anticipates that the Distribution Date for the DGL1 Scheme Consideration will occur on or as soon as reasonably practicable following the Scheme Effective Date. Neither the Company nor the Information Agent shall recognise any sale, assignment or transfer of any Scheme Claim (including any transfer of the Existing Notes) after the Record Date for the purposes of determining entitlement to attend and vote at the Scheme Meeting and all distributions of DGL1 Scheme Consideration shall be made to DGL1 Scheme Creditors via DTC customary procedures irrespective of any sale, assignment or of any Scheme Claim after the Record Date.

 

Recommendation

 

This letter is part of the Explanatory Statement distributed to you for the reasons set out above. In considering the Scheme, you should not rely only on this letter, but you should also consider the more detailed information contained in the remainder of the Explanatory Statement (including the Scheme).

 

For the reasons explained in this letter, the board of directors of the Company considers the proposed Restructuring to be in the best interests of the DGL1 Scheme Creditors and recommends that the DGL1 Scheme Creditors vote in favour of the Scheme at the Scheme Meeting.

 

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Yours faithfully

 

   


 

for and on behalf of
Digicel Group One Limited

 

 

 

 

 

 

 

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Expected Timetable of Principal Events6

 

Event Expected time and date
Tender Offer Commencement April 1, 2020
Practice Statement Letter Issued April 28, 2020
Provisional Liquidators Appointed April 29, 2020
Record Date: date on which Scheme Claims shall be assessed for the purposes of voting on the Scheme. Close of business. (New York time) on May 13, 2020
Chapter 15 Filing On or around the date of this Explanatory Statement
Voting Instruction Deadline: latest time and date for receipt of Ballots by the Information Agent in order for DGL1 Scheme Creditors’ voting instructions to be taken into account for the purposes of the Scheme Meeting. 5:00 p.m. (New York time) on May 28, 2020
Scheme Meeting7: DGL1 Scheme Creditors who wish to vote on the Scheme in person should attend the Scheme Meeting. 8:00 a.m. (New York Time) / 9:00 a.m. (Bermuda Time) on June 1, 2020
Scheme Sanction Hearing8 June 8, 2020
Scheme Effective Date June 15, 2020
Distribution Date On or as soon as reasonably practicable following the Scheme Effective Date

 

 

 

 

 

 

 

 

 

6Unless otherwise stated, all references to time in this Explanatory Statement are to New York time. The dates in this timetable and mentioned throughout this Explanatory Statement assume that the Scheme Meeting is not adjourned. It is also possible that the Scheme Effective Date may be delayed if any person appeals the order.

 

7The Scheme Meeting will be held via conference call using the following details: +1 917-933-2314 (US), +44 20 3787 4277 (UK), Conference ID: 569 450 771#. The Scheme Meeting will commence at the time stated above. Any DGL1 Scheme Creditor that wishes to attend the Scheme Meeting and vote in person must provide: (i) a duplicate copy of the validly completed Ballot (in any) delivered on their behalf; (ii) evidence of their Beneficial Interest in the Existing Notes as of the Record Date with accompanying proof from the relevant DTC Participant; (iii) evidence of corporate authority (in the case of a corporation) (for example, a valid power of attorney and/or board minutes); and (iv) evidence of personal identity (a passport or other equivalent identification), in each case by email to DGL1@kpmg.bm no later than thirty minutes before the scheduled time of the Scheme Meeting for the purposes of registering a DGL1 Scheme Creditor’s attendance at the Scheme Meeting.

 

8The Bermuda Court will be requested to sanction the Scheme. The date for that hearing has not yet been settled, although it is expected to be on or about June 8, 2020. If this date changes, the dates of all subsequent steps, including the Scheme Effective Date, may be affected. In this event, the rescheduled hearing date will be announced at the Scheme Meeting to the extent then known or otherwise notified to the DGL1 Scheme Creditors by the Information Agent. A notice regarding the date and time of the hearing will be circulated to the DGL1 Scheme Creditors by the Information Agent once the hearing has been scheduled.

 

 

 

 

 

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Are you a DGL1 SCHEME CREDITOR or a Person with an interest in the Existing Notes?

 

The following persons have interests in the Existing Notes:

 

1.DTC Participants: You are a DTC Participant if you are recorded directly in the records of Cede & Co. (as the Existing Depository Nominee) and DTC as holding a Beneficial Interest in any Existing Notes in an account held with DTC, either for your own account or on behalf of an underlying client.

 

2.Intermediary: You are an Intermediary if you hold a Beneficial Interest in any Existing Notes on behalf of another person or other persons and you do not otherwise hold that same Beneficial Interest as a DTC Participant.

 

3.DGL1 Noteholder: You are a DGL1 Noteholder if you hold a Beneficial Interest in the Existing Notes and are is the owner of the ultimate economic interest in any of the Existing Notes. A DTC Participant may also be a DGL1 Noteholder.

 

4.The Existing Depository Nominee and the Existing Notes Trustee.

 

DGL1 Scheme Creditors are entitled to take, or direct the taking of, certain actions in respect of the Scheme.

 

For the purposes of the Scheme, the following persons are DGL1 Scheme Creditors:

 

1.the Existing Notes Trustee;

 

2.the Existing Depository Nominee, as registered holders of the Existing Global Note Certificates; and

 

3.the DGL1 Noteholders, as contingent creditors.

 

The Existing Notes Trustee and the Existing Depository Nominee have been directed by the Bermuda Court not to vote at the Scheme Meeting.

 

Intermediaries are not DGL1 Scheme Creditors unless, and only to the extent that, they are DGL1 Noteholders i.e. they hold some Beneficial Interest and ultimate economic interest in the Existing Notes for their own behalf.

 

Only DGL1 Scheme Creditors holding Scheme Claims as of the Record Date shall be entitled to vote at the Scheme Meeting.

 

As described in the section of this Explanatory Statement entitled Summary of Actions to Be Taken by All DGL1 Scheme Creditors and Appendix 2 (Ballot Package) to this Explanatory Statement, the assistance of Intermediaries may be required in connection with the voting procedures of the Scheme to the extent that underlying DGL1 Noteholders on whose behalf the Intermediary holds the relevant Existing Notes have not already submitted their Instructions pursuant to the terms of the Tender Offer.

 

Master Ballots are required for the purposes of voting on the Scheme where Instructions have not been submitted as part of the Tender Offer. These Master Ballots must be supported by Beneficial Holder Ballots. If you are a DGL1 Noteholder that is not a DTC Participant and/or you hold your interests via an Intermediary you should contact your DTC Participant and/or Intermediary and provide them with a Beneficial Holder Ballot, so that Master Ballots may be submitted on your behalf by the relevant DTC Participant or Intermediary. The form of Master Ballot and Beneficial Holder Ballot is set out in Appendix 2 (Ballot Package) to this Explanatory Statement.

 

In determining whether a particular person is the ultimate beneficial owner and therefore a DGL1 Scheme Creditor entitled to vote, that is entitled to submit a Master Ballot, each of the Company and the Information Agent may rely on such evidence and/or information and/or certification as it shall, in its absolute discretion, think fit and, if it does so rely, such evidence and/or information and/or certification shall, in the absence of manifest error, be conclusive and binding on all concerned.

 

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The number of DGL1 Scheme Creditors voting and the votes cast by them will be taken into account for value and numerosity purposes in relation to the Scheme. In the case of DGL1 Scheme Creditors who have submitted Instructions via their Intermediary or DTC Participant, the Information Agent shall be entitled to treat (in the absence of any evidence to the contrary) each VOI received in the Tender Offer as originating from one DGL1 Scheme Creditor.

 

For further information on the action to be taken by DGL1 Noteholders and persons with an interest in the Existing Notes, see the section of this Explanatory Statement entitled Summary of Actions to Be Taken by All DGL1 Scheme Creditors and Appendix 2 (Ballot Package) to this Explanatory Statement.

 

The following diagram illustrates the relationship between certain persons with interests in the Existing Notes, which are held in global form through DTC:

 

 

Existing Depository Nominee

Cede & Co as Existing Depository Nominee

   
DTC
DTC acts as clearing system for the Existing Notes
   

DTC Participant
(For example, a bank or broker dealer)

Each DTC Participant has interests in the Existing Notes either for its own account (in which case it is the DGL1 Noteholder with respect to those interests) or on behalf of its client (in which case it is not the DGL1 Noteholder with respect to those interests)

   

Intermediary

(For example a bank or brokerage house which does not have an account with a DTC)

There may be one or more Intermediaries between a DTC Participant and a DGL1 Noteholder; these Intermediaries are essentially intermediaries with no economic interest in the Existing Notes

   

DGL1 Noteholder
(The ultimate beneficial owner of and/or the person with the ultimate economic interest in any of the Existing Notes)

Voting
Each DGL1 Noteholder as of the Record Date will be entitled to give instructions for the appointment of a proxy to attend and vote at the Scheme Meeting (either the Chairman or another person selected by the DGL1 Noteholder) or to attend and vote at the Scheme Meeting in person, or will have already delivered Instructions required by the terms of the Tender Offer.

 

 

 

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OUTCOMES FOR DGL1 SCHEME CREDITORS IF THE SCHEME IS SANCTIONED

 

1.1This analysis is provided in order to help DGL1 Scheme Creditors understand what they will be entitled to under the Scheme and, therefore, to decide between the two options available to them, namely to:

 

(a)vote for the Scheme; or

 

(b)vote against the Scheme.

 

1.2The analysis in this section is based on a number of assumptions, and the outcomes are intended to reflect a range of possible outcomes. These assumptions are considered to be reasonable by the Company and its advisors. The key assumptions are set out beginning at paragraph 1.13 below.

 

The recoveries under the Scheme are superior to the expected recoveries from an insolvent liquidation

 

1.3If the Scheme is not sanctioned and the Company enters into a winding-up, the KPMG Liquidation Analysis Report indicates that DGL1 Scheme Creditors would receive a recovery representing between 47% and 60% of their claims against the Company. Those percentages are estimates based on certain assumptions and therefore the actual recoveries could be greater or less than those percentages. The anticipated timeframe for payment of these recoveries is uncertain, but is estimated to take up to three years. By comparison, under the Scheme, it is anticipated that DGL1 Scheme Consideration will be made available to DGL1 Scheme Creditors on or as soon as reasonably practicable following the Scheme Effective Date.

 

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Summary of actions to be taken by all DGL1 Scheme Creditors

 

1.Meetings of DGL1 Scheme Creditors

 

1.1By an order dated on or around the date of this Explanatory Statement, the Bermuda Court has granted the Company permission to convene the Scheme Meeting for DGL1 Scheme Creditors to consider and, if thought fit, approve the Scheme (with or without modifications).

 

1.2For the purposes of voting at the Scheme Meeting, the Bermuda Court has directed that the Existing Notes Trustee and the Existing Depository Nominee shall not be entitled to vote and that the actions described in herein shall not be applicable to the Existing Notes Trustee and the Existing Depository Nominee.

 

2.Actions to be taken in order to vote at the Scheme Meeting

 

2.1If you are a DGL1 Noteholder who validly tendered your Existing Notes and delivered the Instructions as required by the terms of the Tender Offer, you have already authorized the Tender Agent as your lawful agent and attorney-in-fact to take all necessary actions to vote in favour of the Scheme. In furtherance of this authorization, the Tender Agent will, on behalf of the Existing Notes it has received Instructions for, complete and execute the Agent Master Ballot appointing the Chairman of the Scheme Meeting, as proxy for the Scheme Claims represented by such Existing Notes, and providing the Chairman with authority to vote such Scheme Claims in favour of the Scheme in accordance with the Instructions (because the Scheme is on substantially the same or better economic terms to the DGL1 Noteholders as those terms set forth in the Tender Offer Memorandum).

 

2.2The Information Agent has received Instructions from DTC Participants via DTC’s ATOP Procedures; and the related delivery of the nominee instruction forms included in the Tender Offer Materials. In the case of DTC Participants tendering via ATOP the Information Agent shall be entitled to assume that any Existing Notes tendered via the ATOP platform have been done so on the basis that the relevant DTC Participant had received authorization from all relevant underlying Intermediaries and DGL1 Noteholders pursuant to the procedure set out in the Tender Offer Memorandum. As such the Information Agent will only submit the Agent Master Ballot on the basis it has been authorized on behalf of a DTC Participant acting on the authorization of the underlying beneficial owners of the Existing Notes.

 

2.3If you are a DGL1 Noteholder who has not submitted the Instructions pursuant to the Tender Offer as of the Record Date, you may vote at the Scheme Meeting by following the voting procedures out in detail in Appendix 2 (Ballot Package) to this Explanatory Statement. The Ballot Package is set out at and will also be made available to DGL1 Noteholders on the Scheme Website. Validly completed Ballots may be submitted by email. DGL1 Noteholders are also entitled to vote at the Scheme Meeting in person, but to do so must provide: (i) a duplicate copy of the validly completed Ballot (in any) delivered on their behalf; (ii) evidence of their Beneficial Interest in the Existing Notes as of the Record Date with accompanying proof from the relevant DTC Participant; (iii) evidence of corporate authority (in the case of a corporation) (for example, a valid power of attorney and/or board minutes); and (iv) evidence of personal identity (a passport or other equivalent identification), in each case by email to DGL1@kpmg.bm no later than thirty minutes before the scheduled time of the Scheme Meeting for the purposes of registering their attendance at the Scheme Meeting. If you have not submitted Instructions by the Record Date and wish to vote on the Scheme, you must do so using the voting procedures set out in detail in Appendix 2 (Ballot Package) to this Explanatory Statement. Instructions in connection with the Tender Offer will no longer be accepted after the Record Date.

 

2.4Detailed instructions on the actions which DGL1 Scheme Creditors, Intermediaries and DTC Participants (who have not submitted Instructions via the Tender Offer by the Record Date) should take in order to vote at the Scheme Meeting are set out in this Explanatory Statement and the Instruction Packet and are summarised below.

 

2.5Each DGL1 Scheme Creditor should read this Explanatory Statement as a whole, in conjunction with the Instruction Packet. The Instruction Packet includes:

 

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(a)The Explanatory Statement

 

(b)a “Beneficial Holder Ballot” (which includes a section for the appointment of a proxy); and

 

(c)a “Master Ballot” (which includes a section for the appointment of a proxy) for use by the DTC Participant to convey and certify the beneficial holder’s vote; and

 

(d)the Notice of the Scheme Meeting.

 

The form of Agent Master Ballot is not included in the Instruction Packet on the basis that only the Information Agent will be authorized to complete it. However the Agent Master Ballot will be approved by the Bermuda Court for the purposes of voting procedures.

 

The term “Ballot” is used interchangeably below to refer to a Beneficial Holder Ballot or a Master Ballot as the context requires.

 

2.6The following are the key dates that should be noted by DGL1 Scheme Creditors wishing to vote at the Scheme Meeting who have not already submitted Instructions via the Tender Offer by the Record Date:

 

(a)Close of business (New York time) on May 13, 2020: Record Date;

 

(b)5:00p.m. (New York time) on May 28. 2020: Voting Instruction Deadline for receipt of a Master Ballot (or the Instructions) by the Information Agent; and

 

(c)June 1, 2020: Scheme Meeting.

 

2.7Each DGL1 Noteholder that has not submitted Instructions in the Tender Offer prior to the Record Date and who that wishes to vote at the Scheme Meeting, other than by attending in person, will be required to do the following:

 

DGL1 Noteholders holding Existing Notes through DTC Participant or Intermediaries

 

(a)Return a signed and completed Beneficial Holder Ballot (with instructions for the Chairman to vote on the beneficial holder’s behalf at the meeting) to the applicable Intermediary with sufficient time for the Intermediary (if it is not a DTC Participant) to forward the Beneficial Holder Ballot to its DTC Participant or (if the Intermediary is a DTC Participant) to incorporate the vote on a Master Ballot and to submit the Master Ballot to the Information Agent so that it is actually received by the Information Agent by 5:00 p.m. (New York Time) on May 28, 2020 (the “Voting Instruction Deadline”).

 

DGL1 Noteholders holding Existing Notes in their name at DTC

 

(b)A DGL1 Noteholder who is as a record holder in DTC in its own name should vote on the Scheme by completing and signing a Beneficial Holder Ballot and returning it directly to the Information Agent as described in the Beneficial Holder Ballot.

 

Intermediaries and DTC Participants

 

(c)An Intermediary that, on the Record Date, is the record holder of the Existing Notes for one or more DGL1 Noteholders can obtain the votes of the DGL1 Noteholder of such Existing Notes, consistent with customary practices for obtaining the votes of securities held in “street name,” by forwarding to the DGL1 Noteholder the unsigned Beneficial Holder Ballots, together with this Explanatory Statement. Each such DGL1 Noteholder must then indicate his, her, or its vote on the Beneficial Holder Ballot (or by using customary practices), complete the information requested on the Beneficial Holder Ballot, review the certifications contained on the Beneficial Holder Ballot, execute the Beneficial Holder Ballot, and return the Beneficial Holder Ballot to the Intermediary. After collecting the Beneficial Holder Ballots, the Intermediary should, either (i) if it is a DTC Participant, complete a Master Ballot compiling the votes and other information from the Beneficial Holder Ballots, execute the Master Ballot,

 

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and deliver the Master Ballot to the Information Agent so that it is ACTUALLY RECEIVED by the Information Agent on or before the Voting Instruction Deadline. All Beneficial Holder Ballots returned by DGL1 Noteholders should either be forwarded to the Information Agent (along with the Master Ballot) or retained by DTC Participants for inspection for at least one year from the Voting Instruction Deadline; or (ii) if it not a DTC Participant, immediately forward all Beneficial Holder Ballots to its DTC Participant.

 

For the avoidance of doubt, Intermediaries are authorized to collect votes and proxies from their beneficial holder clients in accordance with their customary practices, including the use of a “voting instruction form” in lieu of (or in addition to) a Beneficial Holder Ballot, as well as collecting votes from DGL1 Noteholders through online voting, by phone, facsimile, or other electronic means.

 

EACH INTERMEDIARY SHOULD ADVISE ITS DGL1 NOTEHOLDERS TO RETURN THEIR BENEFICIAL HOLDER BALLOTS TO THE INTERMEDIARY BY A DATE CALCULATED BY THE INTERMEDIARY OR THE INTERMEDIARY’S DTC PARTICIPANT (AS THE CASE MAY BE) TO ALLOW IT (OR ITS DTC PARTICIPANT) TO PREPARE AND RETURN THE MASTER BALLOT TO THE INFORMATION AGENT SO THAT IT IS RECEIVED BY THE INFORMATION AGENT ON OR BEFORE THE VOTING INSTRUCTION DEADLINE.

 

Instructions for Voting by Proxy

 

(a)Each Ballot contains a section for the appointment of a proxy. DGL1 Noteholders should read the language on the Ballot pertaining to the appointment of a proxy carefully and follow the instructions contained therein if they wish to vote by proxy.

 

(b)DGL1 Noteholders intending to vote by proxy must check the appropriate box on the Ballot appointing the Chairman as its proxy for the Scheme Meeting or, alternatively, nominate an individual other than the Chairman (as applicable) in accordance with the instructions included on the Ballot. The DGL1 Noteholder is then required to submit the completed Ballot in accordance with the instructions provided so that the Ballot or Master Ballot (as applicable), including the proxy, is actually received by the Information Agent by no later than the Voting Instruction Deadline.

 

(c)The appointment of a proxy will not preclude a DGL1 Noteholder from attending and voting in person at the Scheme Meeting should it wish to do so. In the event that a DGL1 Noteholder votes in person at the Scheme Meeting, any returned Ballot with such DGL1 Noteholder’s vote and proxy included therein will be deemed to have been revoked for the Scheme Meeting. DGL1 Noteholders attending in person must provide: (i) a duplicate copy of the validly completed Ballot (in any) delivered on their behalf; (ii) evidence of their Beneficial Interest in the Existing Notes as of the Record Date with accompanying proof from the relevant DTC Participant; (iii) evidence of corporate authority (in the case of a corporation) (for example, a valid power of attorney and/or board minutes); and (iv) evidence of personal identity (a passport or other equivalent identification), in each case by email to DGL1@kpmg.bm no later than thirty minutes before the scheduled time of the Scheme Meeting for the purposes of registering their attendance at the Scheme Meeting.

 

Even if you do not appoint a proxy and you do not attend and vote at the Scheme Meeting, you will still be bound by the outcome of the Scheme Meeting. You are therefore strongly encouraged to attend and vote at the Scheme Meeting in person or by proxy.

 

2.8In addition, each DGL1 Noteholder submitting a Beneficial Holder Ballot will be required to represent to the Company and the Information Agent that it has not previously tendered and submitted Instructions in respect of any Existing Notes (whether acquired before or after the Record Date) in the Tender Offer or, if they have, they will be required to disclose to the Information Agent the amount of such Existing Notes so tendered and the relevant VOI in respect of such Existing Notes, so as to avoid double counting for numerosity purposes.

 

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3.Attendance at Scheme Meeting

 

3.1The Scheme Meeting for DGL1 Scheme Creditors to consider and vote on the Scheme will be held at 8:00 a.m. (New York Time) / 9:00 a.m. (Bermuda Time) on June 1, 2020. The Scheme Meeting will be held via conference call using the following details: +1 917-933-2314 (US), +44 20 3787 4277 (UK), Conference ID: 569 450 771#.

 

4.Actions to be taken in order to receive DGL1 Scheme Consideration

 

4.1Following the Scheme Effective Date, delivery of the DGL1 Scheme Consideration shall occur on the Distribution Date following the execution of the New DGL0.5 Indenture and the issue of new Global Notes by DGL0.5 representing the New DGL0.5 Secured Notes, the endorsement of the same by the New Notes Trustee, and expected registration of the new Global Notes in the name of Cede & Co as nominee for DTC. Interests in the new Global Notes will be distributed to DGL1 Scheme Creditors using customary procedures with DTC acting as depository. For further information DGL1 Scheme Creditors should review the section of the Tender Offer Memorandum entitled “Book Entry, Delivery and Form” which is hereby incorporated by reference.

 

If you are in any doubt as to what action you should take in connection with this Explanatory Statement, the proposals contained in it or the documents that accompany it, you are recommended to seek your own independent advice immediately from your legal, financial, tax or other independent advisor.

 

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Part A
Background to the Scheme

 

1.The Company’s PrincIpal Financial Indebtedness

 

1.1The principal outstanding financial indebtedness of the Company consists of the Existing Notes.

 

The Existing Notes

 

1.2On January 14, 2019, the Company issued the Existing Notes as exchange consideration for previous certain 8.250% Senior Notes due 2020 previously issued by Digicel Group Limited (the Company’s indirect shareholder). The proceeds from the Existing Notes were used to refinance part of the Group’s existing indebtedness. No cash proceeds were received at the time of the issue of the Existing Notes.

 

1.3The Existing Notes bear interest at a rate of 8.250% per annum payable semi-annually in arrears and are repayable in full in 2022. As of the date of this Explanatory Statement, US$1,000,000,000 in principal amount was outstanding under the Existing Notes.

 

1.4The Company did not pay the scheduled interest payment on the Existing Notes on March 30, 2020.

 

Other Group Indebtedness

 

1.5A brief description of the Group’s indebtedness is included in the section of the Tender Offer Memorandum entitled “Description of Other Indebtedness” which is hereby incorporated by reference herein.

 

1.6The Existing DGL2 2022 Notes and the Existing DGL2 2024 Notes are each subject to separate Tender Offers, as further described in the Tender Offer Memorandum. The Existing DL 2021 Notes and the Existing DL 2023 Notes are each subject to a further, separate Tender Offer as described in a tender offer memorandum issued by DL and DIFL dated as of April 1, 2020 (as amended). Each of these Tender Offers is subject to a Minimum Participation Condition, which, if satisfied may result in up to 100% of (i) in the case of DGL2, the exchange of each series of the Existing DGL2 Notes for new senior unsecured notes and new perpetual convertible notes, each issued by DGL0.5 as further described in the Tender Offer Memorandum; and (ii) in the case of DL the exchange of each series of the Existing DL Notes for new senior unsecured notes issued by DL and new secured notes issued by DIFL.

 

2.Events leading up to the schemes

 

Background

 

2.1The Group enjoys a strong market position across the 319 telecommunications markets in which it operates. The Group’s revenues for the year ended March 31, 2019 was approximately $2.3 billion, with an operating profit of approximately $479.0 million. However, in recent years the Group has seen significant reductions in voice revenues, which are largely due to the industry-wide trend of voice services being substituted by data usage by mobile subscribers. The growth of data revenues and revenues from other related services such as business solutions and Cable TV & Broadband has not been sufficient to offset the decline in voice revenues. In addition, the expansion into business solutions and Cable TV & Broadband has required significant capital expenditures, which have reduced the Group’s ability to generate operating free cash flow and reduce its finance costs. Further, mobile operators have seen increased competitive pressures and reductions in mobile termination rates, which have negatively impacted their businesses, and these factors are also prevalent in the Group’s markets. Accordingly, the Group finds itself with unsustainable volumes of funded indebtedness.

 

 

 

 

 

9 Thirty-one mobile markets does not include Digicel’s operations in Panama and operations in La Réunion where Digicel provides Business Solutions services

 

 

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2.2Since 2018, the Group has been attempting to manage its debt burden and interest expense through strategic liability management exercises, such as the exchange conducted in 2019 that resulted in the issuance of the Existing Notes. Despite these attempts, the finance costs of the Group have been steadily increasing. The Group’s finance costs increased by $51.4 million, or 19.7%, from $261.5 million in the six months ended September 30, 2018 to $312.9 million in the six months ended September 30, 2019. Interest expenses increased by $26.8 million from $235.4 million in the six months ended September 30, 2018 to $262.2 million in the six months ended September 30, 2019. On an annual basis, finance costs increased by $55.4 million, or 11.0%, from $503.0 million for the year ended March 31, 2018 to $558.4 million for the year ended March 31, 2018.

 

2.3These rising finance costs were accompanied by declining revenues in certain of the Group’s key markets. In Haiti, revenue decreased by $47.1 million, or 13.3%, to $307.4 million in the year ended March 31, 2019 from $354.5 million in the year ended March 31, 2018. In Jamaica, reported revenue decreased by $31.1 million, or 8.2%, to $349.2 million in the year ended March 31, 2019 from $380.3 million in the year ended March 31, 2018. In the French West Indies, revenue decreased by $12.4 million, or 7.1%, to $163.4 million in the year ended March 31, 2019 from $175.8 million in the year ended March 31, 2018. Although these declines were partially offset by small increases in other markets in which the Group operates, in the six months ended September 30, 2019, the Group’s net liabilities increased by approximately $66.7 million, or 29.5%, from $227.6 million, as of March 31, 2019, to $294.3 million, and for the six months ended September 30, 2019, the Group’s net loss increased by approximately $120.3 million to $156.3 million as compared to a net loss of $36.0 million for the equivalent six month period ended September 30, 2018.

 

2.4The Group has also suffered from deterioration in its Central American business. The Group has recorded a significant impairment on its minority investment in DHCAL, the main holding company for the Group’s Central American business segment. As of September 30, 2019, the Company was owed $590.3 million by DHCAL and its subsidiaries under loans provided to them in connection with their operations in Panama and, prior to its disposal, Honduras. The Company has recognized impairment charges totalling $450.3 million and recorded $104.1 million as its share of losses against the carrying value of the loans to DHCAL and its subsidiaries.

 

2.5The nature of the Group’s business is that it operates in markets characterized by rapid technological change, and the growth of the Group’s business depends upon the success of expansion and innovation in the Group’s networks and product offerings. These activities are capital intensive with significant capital expenditures required to add customers to the Group’s network and maintain the Group’s existing customer base. In the face of increasing finance costs and widening losses, the Group has determined that there is a need for a comprehensive restructuring of its debt, so as to reduce aggregate liabilities, improve its liquidity profile and provide flexibility for the Group to access further capital in the future to fund its businesses.

 

The Ad Hoc Group and the Lockup and Support Agreement

 

2.6Discussions with the Ad Hoc Group commenced in early 2020, with the objective of: (a) managing the maturity of and interest expense of the Group’s indebtedness to optimise the use of available cash for the foreseeable future; and (b) treating all stakeholders fairly and in accordance with their respective legitimate expectations.

 

2.7On April 1, 2020, after extensive, good-faith, arm’s length negotiations, the Company, together with certain of its Affiliates, and the Ad Hoc Group agreed that the Ad Hoc Group would tender all of their Existing Notes, Existing DL Notes, and Existing DGL2 Notes in the applicable Tender Offer prior to the applicable expiration of the relevant Tender Offer in exchange for receipt of the exchange consideration set forth in the applicable Tender Offer. As more fully described in paragraph 3.11 in the section entitled Impact of the Lockup and Support Agreement of this Explanatory Statement, the professional expense of the Ad Hoc Group’s Advisors are being paid by the Company, but the Ad Hoc Group is not receiving any fee, consent fee or other additional consideration in exchange for their support of the Restructuring or for entering into the Lockup and Support Agreement.

 

2.8As of the date of the Lockup and Support Agreement, the Ad Hoc Group held approximately $391 million in aggregate principal amount of the Existing DL 2021 Notes, $491 million in aggregate principal amount of Existing Notes, $475 million in aggregate principal amount of Existing DGL2

 

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2022 Notes and $154 million in aggregate principal amount of Existing DGL2 2024 Notes.These holdings represented approximately 30.1%, 49.1%, 50.7% and 15.5% in value of any and all outstanding Existing DL 2021 Notes, the Existing Notes, Existing DGL2 2022 Notes and Existing DGL2 2024 Notes, respectively.

 

2.9With the support of the Ad Hoc Group’s Existing Notes, the Company was well positioned to securing enough votes to satisfy the consent threshold required for the Bermuda Court to sanction the Scheme. Therefore, the Lockup and Support Agreement was a critical step towards providing confidence to the Company’s stakeholders that a restructuring of the Company’s existing funded indebtedness pursuant to a scheme of arrangement is achievable.

 

The Tender Offer and Consent Solicitation

 

2.10On April 1, 2020, the Company commenced a tender offer to exchange all of the Existing Notes for New DGL0.5 Secured Notes, upon the terms and subject to the conditions set forth in the Tender Offer Materials.

 

2.11Concurrent with the Tender Offer, the Group, including the Company, began soliciting, upon the terms and conditions set forth in the Tender Offer Memorandum, (i) consents to effect certain proposed amendments to the indentures governing the Existing Notes, the Existing DL Notes and the Existing DGL2 Notes to eliminate substantially all of the covenants and events of default in any such series of the Existing Notes, the Existing DL Notes and the Existing DGL2 Notes, and with respect to the Existing Notes Indenture, to release the collateral and security (the “Proposed Amendments”), (ii) waivers from Eligible Holders in respect of (x) any default or event of default under any of the foregoing indentures that might occur as a result of the Group electing to promote a scheme and arrangement with respect to any series of Existing Notes, the Existing DL Notes and the Existing DGL2 Notes (the “Scheme Default Waiver”), (y) the obligation to furnish financial statements under the foregoing indentures for a period of 90 days following the applicable deadlines set forth therein (the “Reports Waiver”) and (z) (I) the right to receive interest due (a) in the case of the Existing Notes and Existing DGL2 2022 Notes, on March 30, 2020, and (b) in the case of the Existing DGL2 2024 Notes, on April 1, 2020, and waivers in respect of (II) any claim that may be brought by such Eligible Holder pursuant to the relevant existing indenture in respect of such unpaid interest (the “Interest Payment Waiver” and, together with the Scheme Default Waiver and the Reports Waiver, the “Waivers”) and (iii) consents from Eligible Holders of the Existing Notes and Eligible Holders of the Existing DGL2 Notes to extend the grace period set forth in Section 6.01(a)(i) of the indenture governing the Existing Notes and the indenture governing the Existing DGL2 Notes, as applicable, from 30 to 180 days (the “Proposed Event of Default Amendment”).

 

2.12On April 14, 2020, the Company received a sufficient percentage of consents needed with respect to the Existing Notes to effect the Proposed Amendments, Waivers and the Proposed Event of Default Amendment. The Company and the Existing Notes Trustee have executed and delivered a supplemental indenture dated April 14, 2020 relating to the Proposed Amendments and Proposed Event of Default Amendment with respect to the Existing Notes Indenture immediately giving effect to the Proposed Amendments and Proposed Event of Default Amendment, provided that such Proposed Amendments, Waivers and Proposed Event of Default Amendment will cease to be effective if the Company commences but does not consummate a scheme with respect to the Existing Notes.

 

2.13When tendering Existing Notes pursuant to the Tender Offer, Eligible Holders were also required to deliver the Instructions, that is they were deemed to automatically and unconditionally deliver instructions for the Tender Agent, effective immediately, (a) to act as its true and lawful agent, attorney-in-fact and proxy with respect to the Existing Notes, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), among other things, to take all steps necessary and execute all documentation necessary to cause such tendered Existing Notes to be assigned, transferred and exchanged and (b) in such capacity as proxy, to take all steps necessary and execute all documentation necessary to irrevocably vote in favor of the Scheme (including, if required, attending a meeting and voting on behalf such tendered Existing Notes) with respect to the principal amount of such Existing Notes.

 

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2.14As of the date of this Explanatory Statement, approximately 98.6% in aggregate principal amount of the Existing Notes have been tendered with a corresponding level of consents and Instructions received.

 

The Appointment of Provisional Liquidators

 

2.15With a view to facilitating the Scheme, on April 28, 2020 the Company petitioned for the appointment of the Provisional Liquidators to monitor the Company’s role in the Restructuring and the Scheme. On April 29, 2020 the Bermuda Court made an order confirming such appointment. The terms of the Bermuda Court’s order limit the powers of the Provisional Liquidators, so that the Provisional Liquidators are in effect “light touch”. The Board remains in control of the Company with the Provisional Liquidators providing oversight.

 

2.16The appointment of Provisional Liquidators to monitor the Company’s role in the Restructuring and the Scheme has secured a stay of proceedings in Bermuda and therefore will allow the Scheme to proceed in an orderly fashion. The Company has consulted with its Provisional Liquidators in the period between their appointment and the proposal of the Scheme and understands that the Provisional Liquidators, while not advising the Company or DGL1 Scheme Creditors on the merits of the Scheme, are supportive of the Scheme.

 

3.The Scheme

 

3.1The purpose of the Scheme is to effect a compromise and arrangement between the Company and the DGL1 Scheme Creditors that will apply to all Scheme Claims. Details of the Scheme can be found in Part B (Overview of the Scheme) and Part F (The Scheme) of this Explanatory Statement.

 

3.2The key elements for a sustainable capital structure and a foundation from which DGL0.5 (as the effective successor to the Company) can deliver long-term value for all its stakeholders are all expected by the Company to be available on the Scheme Effective Date and are reasonably expected to prevail over the lifetime of the New DGL0.5 Secured Notes.

 

3.3For the reasons set out in the Practice Statement Letter, the Company has proposed and the Bermuda Court has ordered that DGL1 Scheme Creditors wishing to vote on the Scheme should do so in one class meeting. However, as stated in the Practice Statement Letter, issues relating to the constitution of the class of creditors or issues which might otherwise affect the conduct of the Scheme Meeting should have been raised at the Convening Hearing. The Court would expect those DGL1 Scheme Creditors who raise objections at the Sanction Hearing to show good reason why they did not previously raise any such issues at the Convening Hearing.

 

4.Chapter 15 Recognition of the Scheme

 

4.1Chapter 15 of the U.S. Bankruptcy Code is designed to give judicial access to a foreign debtor (or representative thereof) to, among other things, protect the foreign debtor’s U.S. assets and authorise the foreign debtor or its representative to administer the foreign debtor’s U.S. assets. Chapter 15 is predicated on principles of comity and the fair and efficient administration of cross-border insolvencies. Chapter 15 functions through “recognition” of a foreign proceeding.

 

4.2The Chapter 15 Filing is an application for such recognition and it is a Condition Precedent to the Scheme Effective Date that the Company has obtained the Chapter 15 Recognition Order. If the U.S. Bankruptcy Court recognises the Scheme as the foreign “main” proceeding or foreign “non-main” proceeding of the Company, the automatic stay and selected other provisions of the U.S. Bankruptcy Code take effect within the United States. Once a foreign proceeding is “recognised” under Chapter 15, orders issued in the foreign proceeding may be recognized unless “manifestly contrary to the public policy of the United States,” which is a very demanding standard.

 

4.3The Existing Notes are governed by New York law, the Company, in the Existing Notes Indenture, has submitted to the jurisdiction of New York courts, and certain of the DGL1 Scheme Creditors are expected to be U.S. persons. In order to mitigate the risk of enforcement in the United States and to give effect to the Scheme (if approved by the requisite majorities of the DGL1 Scheme Creditors and sanctioned by the Bermuda Court) in the United States, the Company has resolved to appoint the

 

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Provisional Liquidators, as its foreign representatives (the “Foreign Representatives”) and to commence the Chapter 15 Filing by them with the U.S. Bankruptcy Court in the Southern District of New York (the “U.S. Bankruptcy Court”) on or around the date of this Explanatory Statement.

 

4.4The Company, through its Foreign Representatives, will request that the U.S. Bankruptcy Court hold a recognition hearing as soon as possible after the Scheme Sanction Hearing to avoid any delays in the consummation of the Restructuring.

 

4.5Notice of the Chapter 15 Filing and the relevant dates of the Chapter 15 proceeding will be served upon the following parties:

 

(a)the Company;

 

(b)the office of the U.S. Trustee for the Southern District of New York;

 

(c)counsel to the Ad Hoc Group;

 

(d)the SEC

 

(e)all persons or bodies authorised to administer the Scheme proceedings;

 

(f)the DTC;

 

(g)the Information Agent;

 

(h)any other parties with an interest in the relevant proceedings that have timely requested notice pursuant to Rule 2002 of the U.S. Federal Rules of Bankruptcy Procedure; and

 

(i)all other parties that the U.S. Bankruptcy Court directs.

 

4.6Additionally, the Company will publish notice of the Chapter 15 Filing on the Scheme Website.

 

5.Impact of the successful implementation of the Scheme

 

5.1If the requisite majorities to approve the Scheme at the Scheme Meeting are obtained, the Scheme is sanctioned at the Scheme Sanction Hearing and the Scheme is successfully implemented, all DGL1 Scheme Creditors (including those who do not vote in favour of the Scheme) will be bound by the terms of the Scheme, along with the Company and DGL0.5. As set out in detail below in Part B (Overview of the Scheme) and Part F (The Scheme) of this Explanatory Statement, the Scheme provides for a compromise of all Scheme Claims. In accordance with the Transfer Mechanics that occur on the Scheme Effective Date, the Existing Notes, the Existing Notes Indenture, the Pledge Agreement and all other related instruments, certificates, agreements and other documents will be cancelled, released, terminated, extinguished and discharged without any further act or action by the Company, DGL0.5, the Existing Notes Trustee or any DGL1 Scheme Creditor.10

 

5.2If the Scheme is successfully implemented and the Scheme Effective Date occurs, following implementation of the Transfer Mechanics it is anticipated that the Company will then be liquidated. As a term of the Scheme, the Company will undertake that it shall either procure the transfer to DGL0.5 of Third Party Liabilities not transferred pursuant to the Transfer Mechanics or shall make provision for payment in full of such Third Party Liabilities on or after the Scheme Effective Date.

 

5.3If the Scheme is successfully implemented and the Scheme Effective Date occurs, DGL0.5 anticipates that it will be able to service its obligations in respect of the New DGL0.5 Secured Notes in accordance with the terms thereof. Following consummation of the Restructuring, the Restructured Group would

 

 

 

 

10 Provided, however, that such documents shall continue in effect for the limited purpose of (i) allowing the DGL1 Scheme Creditors to receive their respective DGL1 Scheme Consideration, and (ii) preserving all rights of the Existing Notes Trustee thereunder, including with respect to the Existing Notes Trustee’s Fees and Expenses.

 

 

 

 

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be substantially deleveraged by approximately $1.7 billion, with annual cash interest payments reduced by approximately $125 million. These reduced finance costs will enable the Restructured Group to continue serving its existing customers and remain competitive by investing in the expansion of its telecommunication networks throughout its markets.

 

6.Consequences of a failure to implement the Scheme

 

6.1The proposed Restructuring has been formulated on the basis of extensive negotiations with the Ad Hoc Group, with the objective of treating all stakeholders fairly and in accordance with their respective legitimate expectations and following a comprehensive consideration of the strategic options available to the Company. The scope of feasibility of these options have been limited as a result of confidence in the Company being undermined due to successive years of net losses and recent unprecedented market turbulence occurring as result of the COVID-19 pandemic, the duration of which remains unclear, as discussed above.

 

6.2If the Restructuring were not consummated (of which the Scheme is an essential part), the Company would ultimately be in default on its debt obligations and in the absence of a successful financial and corporate restructuring, the Provisional Liquidators would recommend to the Bermuda Court that the Company proceed to be wound up on the basis of its insolvency. The Board does not believe the Company’s existing obligations and liquidity permit enough time to formulate a consensual restructuring solution substantially different from the Restructuring. Accordingly, while there is considerable uncertainty over the fate of the Group and the Company absent the Restructuring and the Scheme, the relevant comparator to the Scheme is a winding-up of the Company, which would be value-destructive and detrimental to the Company and all of its stakeholders, including the DGL1 Scheme Creditors. In those circumstances, the Company would not be able to satisfy its creditors (including the DGL1 Scheme Creditors) in full, nor provide as much value as they would receive in the Restructuring and the quantum and timing of any distributions to its creditors (including the DGL1 Scheme Creditors) would be very uncertain, and the recoveries for creditors would be substantially lower than otherwise available through the Scheme.

 

6.3There are several factors which would negatively impact stakeholders’ recoveries in a liquidation of the Company:

 

(i)the quality and saleability of assets on the balance sheet;

 

(ii)the complexity and international geographic scope of the Group;

 

(iii)compliance with local laws in the various jurisdictions in which the Group operates;

 

(iv)the ability of the liquidator to gain access to funding to facilitate an orderly winding-up;

 

(v)the ability of the liquidator to retain key resources to facilitate the asset sales;

 

(vi)the amount of time given by, and cooperation from, creditors and counterparties to organise and conduct asset sales in an orderly manner and at maximum value;

 

(vii)the costs incurred in the liquidation process; and

 

(viii)any potential claims from counterparties.

 

6.4Based on the KPMG Liquidation Analysis Report, assuming a projected liquidation process of up to three years, the estimated total recovery to DGL1 Scheme Creditors in a liquidation of the Company ranges from approximately US$484.7 million to US$629.3 million. Assuming US$1 billion of debt is immediately due and payable to DGL1 Scheme Creditors this equates to a recovery of between 47% and 60% for DGL1 Scheme Creditors. Such an insolvency process would be to the detriment of the Company and all stakeholders.

 

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Part B
Overview of the Scheme

 

This section contains a brief overview of the Scheme. The summary information contained herein does not purport to be complete and should be read in conjunction with, and is qualified in its entirety by reference to, the more detailed information presented elsewhere in this Explanatory Statement and which forms part of this Explanatory Statement, and the Scheme.

 

1.Scheme of Arrangement Overview

 

1.1The compromise and arrangement in respect of the Scheme Claims is proposed to be effected by way of the Scheme.

 

1.2A scheme of arrangement is a formal procedure under Section 99 of the Bermuda Companies Act which enables a company to agree a compromise or arrangement with its creditors or any class of its creditors in respect of its debts or obligations owed to those creditors. Under Bermuda law, a scheme of arrangement requires the following to occur in order to become legally binding:

 

(a)the approval of a majority in number representing at least 75% in value of the relevant creditors or classes of creditors present in person or by proxy and voting at each of the relevant meeting convened to approve the scheme of arrangement;

 

(b)the approval of the Bermuda Court by the making of an order sanctioning the scheme of arrangement; and

 

(c)the delivery of the order sanctioning the scheme of arrangement to the Bermuda Registrar of Companies.

 

1.3If the scheme of arrangement is approved by the requisite majorities at the Scheme Meeting and sanctioned by the Bermuda Court and the order sanctioning the scheme of arrangement is delivered to the Bermuda Registrar of Companies, the Scheme will become effective in accordance with its terms and bind all the creditors subject to it, including those creditors who voted in favour of it and those creditors who voted against it or did not vote at all and in each case with their successors and assigns.

 

1.4A scheme of arrangement cannot be sanctioned by the Bermuda Court unless the Bermuda Court is satisfied, among other things, that the relevant provisions of Section 99 of the Bermuda Companies Act, have been complied with.

 

1.5The Company also intends to seek, as part of the Scheme, an order from the Bermuda Court pursuant to Section 101 of the Bermuda Companies Act, being an order providing for the Asset Transfer.

 

1.6The Bermuda Scheme is being proposed because the Company is incorporated in Bermuda.

 

1.7For the reasons set out in paragraphs 3.1 to 3.9 below, the Company has proposed that DGL1 Scheme Creditors wishing to vote on the Scheme should do so in one class meeting.

 

1.8The actions to be taken by all DGL1 Scheme Creditors in order to receive DGL1 Scheme Consideration in accordance with the Scheme are set out in detail in the section entitled Summary of Actions to Be Taken by All DGL1 Scheme Creditors and Appendix 2 (Ballot Package) to this Explanatory Statement, to which DGL1 Scheme Creditors should refer.

 

1.9A summary of: (a) the identities of the DGL1 Scheme Creditors; (b) the process for and voting at the Scheme Meeting; (c) when the Scheme will become effective; (d) the terms of the Scheme; and (e) when the DGL1 Scheme Consideration will be distributed, is set out below.

 

2.Identity of DGL1 Scheme Creditors

 

2.1The Scheme is being proposed by the Company in respect of the Scheme Claims of the DGL1 Scheme Creditors.

 

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2.2As the Existing Notes are securities which are held in global form, the creditors under Existing Notes comprise:

 

(a)the Existing Notes Trustee who, whilst having no economic interest in the Existing Notes, is nevertheless a creditor of the Company by virtue of its right to enforce payments due in respect of the Existing Notes pursuant to various clauses in the Existing Notes Indenture;

 

(b)the Existing Depository Nominee who, whilst also having no economic interest in the Existing Notes, are nevertheless creditors of the Company by virtue of the fact that they have physical possession of the negotiable instrument and are the registered legal holders of the Existing Notes in global form;

 

(c)DTC Participants and other Intermediaries who are contingent creditors of the Company because of the Beneficial Interests they hold in the Existing Notes. DTC Participants and Intermediaries are generally large banks, broker-dealers or other major financial institutions which hold securities accounts with DTC and prime brokerage clients. DTC Participants and Intermediaries may hold Beneficial Interests in the Existing Notes for their own account (in which case they will be DGL1 Noteholders) or as agents for the account of their clients; and

 

(d)DGL1 Noteholders are those with the ultimate Beneficial Interest and ultimate economic interest in the Existing Notes and who are contingent creditors of the Company as a result of their entitlement (pursuant to the terms of the Existing Notes Indenture) to exchange their Beneficial Interests in the global certificates representing the Existing Notes for individual certificated notes (registered in their names) in certain limited circumstances.

 

For the purposes of voting at the Scheme Meeting, the Bermuda Court has ordered that only DGL1 Scheme Creditors who are DGL1 Noteholders as of the Record Date shall be entitled to vote.

 

3.Scheme Meeting: classes for Voting purposes

 

Classes of DGL1 Scheme Creditors

 

3.1Under the provisions of Section 99 of the Bermuda Companies Act, in order for the Scheme to become legally binding on the Company and the DGL1 Scheme Creditors, the Scheme must be approved by a majority in number, representing at least 75% in value, of the DGL1 Scheme Creditors present and voting either in person or by proxy at the Scheme Meeting. The Scheme must then be sanctioned by the Bermuda Court at a subsequent Bermuda Court hearing and a copy of the order delivered to the Bermuda Registrar of Companies before it can become effective.

 

3.2If the rights of creditors affected by the Scheme are so different or would be affected so differently by the Scheme as to make it impossible for them to consult together with a view to their common interest, they must be divided into separate classes for purposes of voting on the Scheme and a separate voting meeting must be held for each class of creditor.

 

3.3It is the responsibility of the Company to formulate the class or classes of creditors for the purpose of convening creditor meeting(s) to consider and, if thought fit, approve the Scheme. The final decision as to class composition will be a matter for the Bermuda Court at the Sanction Hearing after taking into account any objections from DGL1 Scheme Creditors.

 

3.4The Company has considered the existing and prospective rights of the DGL1 Scheme Creditors against the Company in the absence of the Scheme (i.e., in a winding up of the Company) and the rights of the DGL1 Scheme Creditors under the proposed Scheme. Having considered these rights, the Company has concluded that it is appropriate that all DGL1 Scheme Creditors vote as one class in a single meeting.

 

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3.5As all DGL1 Scheme Creditors11 hold economic and Beneficial Interests in the one single series of debt securities issued by the Company, all DGL1 Scheme Creditors’ rights against the Company are identical, and each DGL1 Scheme Creditor would, after the realization of any assets from the Pledge Agreement (which will be insufficient to satisfy all Claims under the Existing Notes and the Existing Notes Indenture), have a senior secured claim against the Company in the principal amount of Existing Notes held by that DGL1 Scheme Creditor (together with any other amounts accruing pursuant to the terms of the Existing Notes and the Existing Notes Indenture).

 

3.6In order to determine the difference that the proposed Scheme would make to the rights of DGL1 Scheme Creditors, it is necessary to determine the correct comparator. The Company is currently unable to pay its debts on a cash flow basis and is balance sheet insolvent, and the Board does not believe the Company’s existing obligations and liquidity permit enough time to formulate a consensual restructuring solution substantially different from the Restructuring. If the Company were unable to pay its debts when due, its Provisional Liquidators would recommend to the Bermuda Court that the Company proceed to be wound up on the basis of its insolvency. Accordingly, since the Company, having received the required support for a Scheme, does not contemplate completing the Tender Offer without the Scheme, the relevant comparator to the Scheme is a winding up of the Company. It is anticipated that the Company would be wound up in accordance with the laws of Bermuda because the Company is incorporated in Bermuda and, as such, the Bermuda Courts have jurisdiction to conduct winding-up proceedings in respect of the Company should the relevant circumstances arise.

 

3.7In the event of the insolvent liquidation of the Company, pursuant to Bermuda insolvency law, all DGL1 Scheme Creditors will rank pari passu and will have the same rights to have their Claims determined through a proof of debt process or by way of a challenge to the liquidator’s decision on a proof of debt or the liquidator permitting the continuation of extant court proceedings. The rights of the DGL1 Scheme Creditors in the event of the Company’s liquidation are therefore substantively the same and, in any event, are not so dissimilar as to make it impossible for them to consult together with a view to a common interest. There are also no other creditors of the Company that are subject to the compromises contained in the Scheme.

 

3.8In addition, each DGL1 Scheme Creditor will be treated identically under the Scheme and be entitled to its pro rata share (based upon the principal amount of its Existing Notes) of DGL1 Scheme Consideration.

 

3.9For the reasons set out in paragraphs 3.5 to 3.8, the Company considers that the rights of the DGL1 Scheme Creditors under the Scheme are not so dissimilar as to make it impossible for them to consult together with a view to a common interest.

 

Impact of the Lockup and Support Agreement

 

3.10The Company has considered whether the terms of, or transactions contemplated by, the Lockup and Support Agreement have an impact on the classification of creditors for the purposes of the Scheme. The Company has concluded that they do not. The existence of the Lockup and Support Agreement has been made available to all DGL1 Scheme Creditors and there is no consideration payable to any member of the Ad Hoc Group on account of its entry into the Lockup and Support Agreement.

 

3.11In return for the time that certain DGL1 Noteholders have committed to negotiating the Lockup and Support Agreement, Tender Offers, Scheme and Restructuring, the Company has agreed to pay the fees and expenses of Kirkland & Ellis LLP, Weil, Gotshal & Manages LLP and PJT Partners LP, as advisors to certain DGL1 Scheme Creditors that are party to the Lockup and Support Agreement, pursuant to certain letter agreements. The Company believes the payment of such fees and expenses is commercially justifiable and does not necessitate making such DGL1 Scheme Creditors a separate class for the purposes of the Scheme.

 

Conclusion

 

 

 

11 For the purposes of this analysis, the Existing Notes Trustee and the Existing Depository Nominee are disregarded because the Bermuda Court has directed them not to exercise any voting rights at the Scheme Meeting in respect of the Existing Notes.

 

 

 

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3.12For the reasons stated above, the Company considers that the rights of the DGL1 Scheme Creditors are not so dissimilar as to make it impossible for them to consult together with a view to a common interest. Rather, the Company considers that DGL1 Scheme Creditors are able to consult together because of their substantial commonality of interests.

 

3.13Accordingly, the Company has concluded and the Bermuda Court has ordered that it is appropriate that the Scheme Meeting be convened with one class of creditors comprising the DGL1 Scheme Creditors.

 

4.Scheme Meeting: process for Voting

 

4.1DGL1 Scheme Creditors should refer to the detailed instructions in relation to voting at the Scheme Meeting in the section entitled Summary of Actions to Be Taken by All DGL1 Scheme Creditors and Appendix 2 (Ballot Package) to this Explanatory Statement. Please note that the DGL1 Noteholders, as the beneficial owners of and/or the persons with the ultimate economic interest in the Existing Notes, are the persons with the “real” interest in the Scheme Claims represented by the Existing Notes. Accordingly, and in line with the practice most commonly adopted in Bermuda, only the DGL1 Noteholders as of the Record Date will be entitled to vote as DGL1 Scheme Creditors at the Scheme Meeting and the Company will seek directions from the Bermuda Court that in the event of a vote being cast by more than one creditor in respect of the same debt, the Chairman shall be authorised to count only the votes of the person with the ultimate economic interest in that debt.

 

4.2If Instructions have not been delivered by a DGL1 Scheme Creditor before the Record Date, or a Ballot has not been submitted by or on behalf of a DGL1 Scheme Creditor to the Information Agent before the Voting Instruction Deadline, then that DGL1 Scheme Creditor will not be entitled to vote at the Scheme Meeting unless voting in person at the Scheme Meeting.

 

4.3The amount of the Scheme Claims of each DGL1 Scheme Creditor who submits Instructions or a valid Ballot (as applicable) in respect of the Scheme Claims will be calculated for voting purposes as of the Record Date based upon the principal amount of Existing Notes represented by such Scheme Claims (excluding any accrued interest or other amounts due pursuant to the Existing Notes or the Existing Notes Indenture) and upon on information confidentially provided to the Company by the Information Agent, which shall include any documents or information provided by each DGL1 Scheme Creditor in support of its Scheme Claims. This information will be used by the Chairman to determine whether each resolution is validly passed at the Scheme Meeting. Specifically, votes of DGL1 Scheme Creditors will be admitted at the Scheme Meeting at a value equal to their holding of the outstanding principal amount of the Existing Notes (excluding any accrued interest or other amounts due pursuant to the Existing Notes or the Existing Notes Indenture) in which each DGL1 Scheme Creditor held an economic or beneficial interest as principal as of the Record Date (without double counting).

 

4.4If a Scheme Claim is unascertained, contingent or disputed (in part) but the Chairman is able to estimate a minimum value of that Scheme Claim, then the Chairman may admit the Scheme Claim for voting purposes at that minimum value. If a Scheme Claim is disputed in its entirety, or the Chairman is otherwise unable to place a minimum value on it, then that Scheme Claim shall be rejected by the Chairman in its entirety for voting purposes. If a discretion is granted to the Chairman as a proxyholder to vote a Scheme Claim, the Chairman will vote such a Scheme Claim in favour of the DGL1 Scheme.

 

5.When will the Scheme be Effective?

 

Scheme Sanction Hearings

 

5.1Under Section 99 of the Bermuda Companies Act, a Bermudian scheme of arrangement becomes effective in accordance with its terms and is binding on the relevant company and all its creditors who are intended to be bound by the scheme, when the order of the Bermuda Court sanctioning the scheme of arrangement is delivered to the Bermuda Registrar of Companies. The Company expects that the Scheme Sanction Hearing will take place on or about June 8, 2020 and that at this same hearing the Bermuda Court will determine the appropriateness of making an order under section 101 of the Bermuda Companies Act. Once the date of the Bermuda Scheme Sanction Hearing is confirmed by the Bermuda Court, the Information Agent will provide notice to the DGL1 Scheme Creditors.

 

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Occurrence of the Scheme Effective Date

 

5.2Pursuant to the Scheme, following:

 

(a)the approval of the Scheme (with or without modifications, subject to the terms of the Scheme) at the Scheme Meeting by a simple majority in number of the DGL1 Scheme Creditors entitled to vote at the Scheme Meeting either in person or by proxy representing at least three fourths in value of the Scheme Claims;

 

(b)the sanction of the Scheme (with or without modifications, subject to the terms of the Scheme) by the Court;

 

(c)the receipt by the Company of the Section 101 Order or the Sale Documents becoming effective in accordance with their terms, as the case may be;

 

(d)entry of an order by the US Bankruptcy Court pursuant to Chapter 15 of the US Bankruptcy Code, recognizing and enforcing the Scheme;

 

(e)completion of the Founder Equity Injection;

 

(f)payment in full, in cash of the then liquidated Existing Notes Trustee’s Fees and Expenses that have been invoiced to the Company no less than two (2) Business Days prior to the Scheme Effective Date;

 

(g)payment of all outstanding or otherwise applicable fees of Advisors to the Ad Hoc Group; and

 

(h)the delivery of an office copy of the Sanction Order to the Registrar of Companies for registration,

 

the Scheme Effective Date will occur.

 

6.What will the Scheme Do?

 

6.1The proposed Restructuring involves a compromise and arrangement between the Company and the DGL1 Scheme Creditors to be effected by way of the Scheme.

 

Transfer Mechanics and Compromises

 

6.2On the Scheme Effective Date, the Transfer Mechanics shall occur through the following steps, each of which is interconditional on the other and each of which shall occur immediately after the preceding step, such that all steps occur upon the Scheme Effective Date.

 

Step 1

 

The Existing Notes shall be deemed transferred without any further act or action by any DGL1 Scheme Creditor to DGL0.5 in consideration for DGL0.5 issuing the DGL1 Scheme Consideration pro rata to each DGL1 Scheme Creditor based upon the principal amount of Existing Notes held by the relevant DGL1 Scheme Creditor. DGL0.5 shall become a creditor of the Company in an amount equal to the Company Payable. DGL0.5 shall make available to DTC on the Scheme Effective Date the DGL1 Scheme Consideration for payment to the DGL1 Scheme Creditors through an exchange of the Existing Notes for the New DGL0.5 Secured Notes anticipated to be performed by DTC in accordance with its customary practices and procedures on or as soon as practicable after the Scheme Effective Date.

 

Step 2

 

The Asset Transfer will occur either pursuant to a Section 101 Order or the Sale Documents. The net value transferred by the Company to DGL0.5 pursuant to the Asset Transfer will create the Company

 

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Receivable. The Company Payable will be immediately set-off against the Company Receivable (thereby eliminating the Company Receivable) in consideration for the Asset Transfer.

 

Step 3

 

The DGL0.5 Receivable and all Scheme Claims shall be released and compromised as follows:

 

(a)the Existing Notes, the Existing Notes Indenture, the Pledge Agreement and all other related instruments, certificates, agreements and other documents will be cancelled, released, terminated, extinguished and discharged without any further act or action by the Company, DGL0.5, the Existing Notes Trustee or any DGL1 Scheme Creditor; provided, however, that such documents shall continue in effect for the limited purpose of (i) allowing the DGL1 Scheme Creditors to receive their respective DGL1 Scheme Consideration, and (ii) preserving all rights of the Existing Notes Trustee thereunder, including with respect to the Existing Notes Trustee’s Fees and Expenses.

 

(b)the Existing Notes shall be deemed surrendered without any further act or action by the Company, DGL0.5 or any DGL1 Scheme Creditor;

 

(c)all of the rights, title and interest of the DGL1 Scheme Creditors in respect of Scheme Claims (including for the avoidance of doubt, those of Scheme Creditor Parties), or in respect of any Claims against DGL0.5 under or related to the Existing Notes arising pursuant to the Transfer Mechanics, shall be subject to each of the arrangements and compromises set out in this Scheme;

 

(d)the respective rights and obligations of the DGL1 Scheme Creditors (including, for the avoidance of doubt, any person that acquires an interest in the Existing Notes after the Record Date), the Company, DGL0.5 and the Existing Notes Trustee towards one another under the Existing Notes Indenture and the Existing Notes shall be deemed fully satisfied, discharged and terminated; provided, however, that such rights and obligations shall continue for the limited purpose of (i) allowing the applicable DGL1 Scheme Creditors to receive their respective DGL1 Scheme Consideration under the Scheme, and (ii) preserving all rights of the Existing Notes Trustee thereunder, including with respect to the Existing Notes Trustee’s Fees and Expenses.

 

6.3The Company will undertake that to the extent any Third Party Liabilities are not transferred to DGL0.5 pursuant to the Transfer Mechanics, then the Company shall either procure the transfer of such Third Party Liabilities to DGL0.5 or shall make provision for payment in full of such Third Party Liabilities on or after the Scheme Effective Date.

 

6.4On or as soon as practicable after the Scheme Effective Date, the Company and DGL0.5 shall:

 

(a)take any action(s) to ensure that the global notes representing the Existing Notes are cancelled; and

 

(b)give any instructions and consents to the Existing Notes Trustee and DTC, as applicable, that may be required of the Company or DGL0.5 to accomplish the exchange of the Existing Notes for the New DGL0.5 Secured Notes identified in “Step 1” of the Transfer Mechancis (which exchange, for the avoidance of doubt, is anticipated to be performed by DTC in accordance with its customary practices and procedures on or as soon as practicable after the Scheme Effective Date) and to accomplish sub-clause (a) set forth immediately above.

 

6.5On the Scheme Effective Date, the Section 101 Order shall be deemed to be incorporated in and form part of the Scheme and the transfers contemplated by the Section 101 Order shall occur, provided that if the Court refuses to give the Section 101 Order, the Company will instead execute the Sale Documents and implement the Asset Transfer pursuant to the authority conferred by and the instructions contained in the Scheme.

 

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DGL1 Scheme Consideration and Release of Scheme Claims

 

6.6With immediate effect on and from the Scheme Effective Date, each Scheme Creditor Party and (solely in respect of clauses (b), (c)(ii) and (iii), and (d) below) DGL0.5 irrevocably, unconditionally, fully and absolutely:

 

(a)waives, discharges and releases all of its rights, title and interest in and to its Scheme Claims in consideration for its entitlement to receive the DGL1 Scheme Consideration in accordance with the Scheme;

 

(b)except as otherwise expressly provided in the Scheme, waives, discharges and releases any Released Claim it may have under or in connection with the Existing Notes Indenture, the Pledge Agreement, and/or the Existing Notes against any Released Person in relation to any breaches or defaults under the Existing Notes Indenture, the Pledge Agreement and/or the Existing Notes occurring on or before the Scheme Effective Date or which may occur as a result of implementation of the Scheme;

 

(c)ratifies and confirms everything which any Released Person may lawfully do or cause to be done in accordance with any authority conferred by the Scheme and agrees not to challenge:

 

(i)the Transfer Mechanics, Sale Documents or the Section 101 Order, as the case may be, and the transactions contemplated thereby in each instance;

 

(ii)the validity of any act done or omitted to be done in good faith by any Released Person to implement the transactions and compromises contemplated by the Scheme; or

 

(iii)the exercise or omission to exercise of any power conferred in accordance with the provisions of the Scheme in good faith by any Released Person.

 

(d)waives, releases and discharges each and every Released Claim which it ever had, may have or hereafter can, shall or may have against any Released Person; and

 

(e)undertakes to the Released Persons that it will not and shall procure that its Scheme Creditor Parties will not, directly or indirectly commence or continue, or instruct, direct or authorise any other person to commence or continue, any Proceedings in respect of or arising from any Released Claims.

 

6.7Pursuant to the terms of the Scheme, each DGL1 Scheme Creditor acknowledges that it may later discover facts in addition to or different from those which it presently knows or believes to be true with respect to the subject matter of the Scheme, but it is its intention to fully, and finally forever settle and release any and all matters, disputes and differences, whether known or unknown, suspected or unsuspected, which presently exist, may later exist or may previously have existed between it and one or more of the Released Persons in respect of the Released Claims, and that in further of this intention, the waivers, releases and discharges given in the Scheme shall be and shall remain in effect as full and complete general waivers, releases and discharges notwithstanding the discovery or existence of any such additional or different facts

 

6.8From and after the Scheme Effective Date, no person or entity, including, without limitation, the Scheme Creditor Parties shall be entitled to commence, continue, threaten or procure the commencement or continuation of any Proceeding, whether directly or indirectly, against any of the Released Persons or in respect of any property of any of the Released Persons in respect of any Released Claim.

 

6.9The Company shall be fully entitled to enforce the releases of the DGL1 Scheme Creditors as described in paragraphs 6.7 and 6.8 in its own name(s), as applicable.

 

6.10Each Released Person shall be fully entitled to enforce the releases described in paragraph 6.7 in its own name, (whether by way of a Proceeding or by way of defense or estoppel (or similar theory) in any

 

43 

 

jurisdiction whatsoever) as if it were a party hereto, pursuant to the provisions of the Contracts (Rights of Third Parties) Act 2016 of Bermuda and/or any other applicable law which so permits.

 

6.11Each DGL1 Scheme Creditor is deemed to acknowledge that if it, or any person claiming through it (including any Scheme Creditor Parties), takes any Proceedings against any Released Persons in breach the releases contained in the Scheme, the Released Person shall be entitled to obtain an order as of right staying those Proceedings and providing for payment, by the DGL1 Scheme Creditor (and/or to the extent applicable, any Scheme Creditor Parties) concerned and any person claiming through it, of any costs, charges or other expenses howsoever incurred by such Released Person as a result of or in connection with taking such Proceedings on a full indemnity basis.

 

Authority to execute documents on behalf of the DGL1 Scheme Creditors

 

6.12On and from the Scheme Effective Date, in consideration of the rights provided to the DGL1 Scheme Creditors under the Scheme and notwithstanding any term of any relevant document, each DGL1 Scheme Creditor will appoint the Company in respect of any and all Scheme Claims arising under or in connection with the Existing Notes, the Pledge Agreement or the Existing Notes Indenture as its attorney and agent and will irrevocably authorise, direct, instruct and empower the Company (represented by any authorised representative) to:

 

(a)enter into, execute and deliver (whether as a deed or otherwise) for and on behalf of each DGL1 Scheme Creditor the Restructuring Documents to which the DGL1 Scheme Creditors, or any of them, are named as a party and any other document referred to, contemplated by or ancillary to any of the foregoing; and

 

(b)take whatever action is necessary to ensure that the books and records of DTC are updated to reflect the terms of the Scheme, including without limitation to: (i) instruct DTC to debit the Beneficial Interests relating to the Existing Notes from the relevant DTC Participants; (ii) authorise the cancellation of the book entry interests in respect of the Existing Notes; and (iii) take or carry out any other step or procedure reasonably required to effect the settlement of the Scheme.

 

Assignment of Scheme Claims between Record Date and Distribution Date

 

6.13Neither the Company nor the Information Agent shall recognise any sale, assignment or of any Scheme Claim after the Record Date for the purposes of determining entitlement to attend and vote at the Scheme Meeting.

 

6.14All distributions of DGL1 Scheme Consideration shall be made to DGL1 Scheme Creditors in accordance with the Scheme irrespective of any sale, assignment or of any Scheme Claim after the Record Date.

 

6.15A transferee of an economic, beneficial or proprietary interest in the Existing Notes after the Record Date will, however, be bound by the terms of the Scheme in the event that it becomes effective, and any Existing Notes to which such transferee is entitled will be cancelled on the Scheme Effective Date in accordance with the terms of the Scheme.

 

Modifications

 

6.16Subject to the terms of the Scheme, the DGL1 Scheme Creditors will agree that the Company may, subject to the terms of the Lockup and Support Agreement12, at any court hearing to sanction the

 

 

 

 

 

 

12 Under the Lockup and Support Agreement, any modification to the Scheme (unless such change is of a typographical nature or does not adversely affect the interests of the DGL1 Noteholders holding more than 50% of the Existing Notes subject to the Lockup and Support Agreement or the Scheme expressly provides otherwise) may not be effected without the consent of the Company, the Majority Noteholder Parties (as defined in the Lockup and Support Agreement), the Majority Ad Hoc Group (as defined in the Lockup and Support Agreement) and the DGL1 Noteholders holding more than 50% of the Existing Notes subject to the Lockup and Support Agreement; provided that any modification to the Core Terms (as defined in the Lockup and Support Agreement) requires the consent of the Company Party, the Super-Majority Noteholder

 

 

44 

 

Scheme, consent on behalf of itself and all DGL1 Scheme Creditors and anyone else concerned to any modification of, or addition to, the Scheme and/or any of the Restructuring Documents or any terms or conditions which, in each case, the Bermuda Court may think fit to approve or impose which is necessary for the implementation of the Scheme, provided that such modification, addition, term or condition does not have a materially adverse effect on the rights of the DGL1 Scheme Creditors or the Indenture Trustee, or any of them, under the Scheme or any Restructuring Document.

 

7.limits on exculpation

 

Nothing in the Scheme shall release, waive or discharge any Liability of any person arising under or in connection with any Excluded Claims.

 

8.Termination of the Scheme

 

If the Scheme Effective Date does not occur on or before the Longstop Time, the terms of and the obligations on the parties under or pursuant to the Scheme shall lapse and all of the compromises and arrangements provided by this Scheme and any releases granted pursuant to this Scheme shall be of no effect and shall be construed as if it had never become effective, and the rights and obligations of the DGL1 Scheme Creditors shall not be affected and shall be reinstated and remain in full force and effect.

 

 

 

 

 

 

 

 

Parties (as defined in the Lockup and Support Agreement) and the Majority Ad Hoc Group.

 

45 

 

Part C
Overview of the new dgl0.5 secured notes AND THE RESTRUCTURING DOCUMENTS

 

The Restructuring Documents are the New DGL0.5 Secured Notes, all security documents required to give effect to the New DGL0.5 Secured Notes Collateral, the New DGL0.5 Indenture, the Sale Documents (only to the extent the Section 101 Order is not made) and any other ancillary documents reasonably required to effectuate the terms of the Scheme.

 

The New DGL0.5 Secured Notes are being issued under the New DGL0.5 Indenture and Citigroup Global Markets Inc. has agreed to act as dealer manager for the purpose of the issuance and distribution of New DGL0.5 Secured Notes to DGL1 Scheme Creditors.

 

A summary and a description of the New DGL0.5 Secured Notes and the provisions of the New DGL0.5 Indenture can be found in the sections of the Tender Offer Memorandum entitled “Summary of the New Notes”, and “Description of the New DGL0.5 Secured Notes” which are hereby incorporated by reference.

 

A summary of the assets and liabilities transferred to DGL0.5 pursuant to the Asset Transfer is shown in the Balance Sheet appended to the Explanatory Statement at Appendix 6.

 

46 

 

Part D
Risk Factors

 

1.SCHEME-RELATED RISK FACTORS

 

Parties May Object to the Company’s Determination of the Class Composition

 

The Company has determined that there will be only one Scheme Meeting of one class of DGL1 Scheme Creditors for the purpose of voting on the Scheme. Separate meetings are only required if there are separate classes of creditors. It is the rights of creditors, not their separate commercial interests, which determine whether they form a single class or separate classes. The rights of those included in a single class can be subject to material differences, provided that they are not “so dissimilar as to make it impossible for them to consult together with a view to their common interest”.

 

The Bermuda Court should take a broad approach to the composition of classes to avoid giving unjustified veto rights to a minority group such that the test for classes becomes an instrument of oppression by a minority. This means that the Bermuda Court will adopt a broad, rather than a narrow, approach to classes where there is any doubt in the matter.

 

All DGL1 Scheme Creditors hold identical rights in respect of their holdings of the Existing Notes, and all DGL1 Scheme Creditors are equally entitled to a pro rata portion of the DGL1 Scheme Consideration, so it cannot reasonably be said that they are so dissimilar as to make it impossible for them to consult together with a view to their common interest. The Company has therefore formed the view and sought directions on the basis that there is only one class of Scheme Creditors. However, it is possible that a DGL1 Scheme Creditor may dispute this determination and challenge the validity of the Scheme Meeting.

 

Cross-Holdings

 

Certain members of the Ad Hoc Group are holders of debt issued by the Company’s Affiliates that is subject to the Tender Offers promulgated by DGL2 and DL. A DGL1 Scheme Creditor may argue that the presence of these cross-holdings constitutes the Ad Hoc Group as a separate class for the purposes of the Scheme. The Company does not believe this is an accurate evaluation of the Scheme, as the Scheme is separate and distinct from the Tender Offers conducted by other members of the Group. The Company also believes that the compromise to be effectuated by the Scheme reflects the legitimate expectation of holders of the Existing Notes based, in part, upon a valuation exercise conducted by KPMG IE.

 

Ad Hoc Group Expenses

 

The Company has agreed to pay the expenses of certain DGL1 Noteholders comprising the Ad Hoc Group, including the expenses of their professional advisors. The Company considers that this undertaking to pay the Ad Hoc Group’s expenses, which are not material, represents a commercially justifiable payment to members of the Ad Hoc Group in respect of the time that the Ad Hoc Group has committed to negotiating the Tender Offers, the Scheme and the Restructuring. As such, the Company does not consider that the reimbursement of the Ad Hoc Group’s expenses constitutes the Ad Hoc Group as a separate class for the purposes of the Scheme.

 

It is possible that the Bermuda Court may find that the reimbursement to members of the Ad Hoc Group is unreasonable, and that the reimbursement obligation combined with the presence of cross-holdings of Ad Hoc Group members renders the interests of the members of the Ad Hoc Group sufficiently dissimilar from those of other DGL1 Scheme Creditors such that the Ad Hoc Group ought to form a different class of creditors. The Company does not believe this is an accurate evaluation of the Scheme, as the Scheme is separate and distinct from the Tender Offers conducted by other members of the Group. The Company also believes that the compromise to be effectuated by the Scheme reflects the legitimate expectation of holders of the Existing Notes confirmed by the KPMG Liquidation Analysis Report. However, in such circumstances, the Company may be required to reconstitute the Scheme Meeting and will be required to obtain the statutory majorities for approval of the Scheme from each of multiple classes of creditors. There can be no assurance that such statutory majorities would be obtained and that, therefore, the Scheme would be approved and sanctioned.

 

47 

 

The Company May Fail to Satisfy the Vote Requirement

 

If the statutory majorities are obtained at the Scheme Meeting, the Company intends to seek, as promptly as practicable thereafter, sanction of the Scheme. However, even though 75% in value of the DGL1 Scheme Creditors have indicated that they will vote in favour of the Scheme by virtue of submitting the Instructions via the Tender Offer, in the event a majority in number of DGL1 Scheme Creditors voting at the Scheme Meeting (in person or by proxy) do not vote in favour of the Scheme then the compromises contained in the Scheme will not be consummated.

 

The Company May Not Be Able to Secure Sanction of the Scheme

 

Even if the requisite votes in favour of the Scheme are received, there can be no assurance that the Bermuda Court will sanction the Scheme. A DGL1 Scheme Creditor or other interested third party might challenge the Scheme. The Bermuda Court could decline to sanction the Scheme if it found that any of the statutory requirements for sanction were not met or there was some other compelling reason militating against the Bermuda Court exercising its discretion to sanction the Scheme. If the Scheme is not sanctioned, DGL1 Scheme Creditors may still be entitled to receive their pro rata allocation of New DGL0.5 Secured Notes pursuant to the Tender Offer (assuming the Minimum Participation Condition has been satisfied), but the Founder Equity Contribution would not be consummated.

 

The Company May Not Obtain Recognition of the Scheme in the United States

 

Even if the Scheme is approved at the Scheme Meeting and is sanctioned by the Bermuda Court, effectiveness of the Scheme is conditional, inter alia, upon the entry of an order by the U.S. Bankruptcy Court pursuant to chapter 15 of the U.S. Bankruptcy Code (the “Chapter 15 Recognition Order”), recognizing and enforcing the Scheme. Although the Company does not currently anticipate material difficulties in obtaining this approval and anticipates that this approval will be provided within a short period of time after the Sanction Order is obtained, the Company does not control the granting of the Chapter 15 Recognition Order or the timing thereof, and there can be no assurance that it will be granted on a timely basis or at all. If the Scheme is not recognized by the U.S. Bankruptcy Court, the Scheme will not be implemented. Even if the Scheme is approved at the Scheme Meeting, it is possible for a person with an interest in the Scheme (whether a Scheme Creditor or otherwise) to object to entry of the Chapter 15 Recognition Order and to attend or be represented in the chapter 15 proceedings in order to make representations that the Chapter 15 Recognition Order should not be approved.

 

Risk of Termination of the Lockup and Support Agreement

 

The Lockup and Support Agreement contains certain provisions that grant the parties thereto the ability to terminate Lockup and Support Agreement upon the occurrence of certain events or conditions. In the event the Lockup and Support Agreement is terminated, the Company may be forced to pursue an alternative restructuring process that lacks the same broad creditor support. The termination of the Lockup and Support Agreement could result in no restructuring transaction, an alternative transaction or a liquidation of the Company, each of which would preclude consummation of the Scheme and could significantly and detrimentally impact the ability of the Company to pay its debts as they fall due and to operate as a going concern

 

The Scheme Effective Date May Not Occur

 

The Scheme Effective Date is subject to a number of Conditions Precedent. If such Conditions Precedent are not met or waived, the Scheme Effective Date will not take place. There can be no assurance as to such timing or as to whether the Scheme Effective Date will, in fact, occur. If the Scheme Effective Date does not occur on or prior to the Longstop Time, the terms of and the obligations on the parties under or pursuant to the Scheme shall lapse and all of the compromises and arrangements provided by this Scheme and any releases granted pursuant to this Scheme shall be of no effect and shall be construed as if it had never become effective.

 

48 

 

A long and protracted alternative restructuring may be on worse terms and could adversely impact management’s ability to manage the Group’s operations and may otherwise adversely affect its business

 

If the Scheme is not approved, there can be no assurance that the Group would be able to obtain terms for an alternative financial restructuring on better terms for stakeholders in the Group or that any such alternative financial restructuring would be successfully implemented. Any alternative to the Restructuring that the Group is required to pursue, may take substantially longer to complete than the Restructuring and could disrupt the Company’s business further. In addition, the negotiation of an alternative financial restructuring would require significant management resources and would divert the attention of management away from the operation of the Group’s business and the implementation of its business plan and may cause some members of management to leave.

 

A protracted business rescue process would also likely result in a large amount of negative publicity, which would harm the Group’s reputation and may make it harder for the Group to attract and maintain customers, investors and employees. Such reputational damage could lead to a decreased customer base, reduced income and higher operating costs and may have a material adverse effect on the Group’s business, financial condition and results of operations. In addition, concerns about the financial health of the Group may cause certain of the Group’s customers to breach or terminate their contracts with it.

 

Adverse publicity relating to the Restructuring or the financial condition of the Group may adversely affect the Group’s client and supplier relationships and/or the market perception of the Group’s business

 

Adverse publicity relating to the Restructuring or the financial condition of the Group or of other participants in the market(s) in which it operates may have a material adverse effect on the Group’s customer and supplier relationships (including financial and insurance institutions) and/or the market perception of its business.

 

Customers may choose not to (and it may be more difficult to convince such customers to) continue trading with the Group. Existing suppliers may also choose not to do business with the Group, may demand quicker payment terms and/or may not extend normal trade credit. The Group may find it difficult to obtain new or alternative suppliers. Ongoing negative publicity may have a long-term negative effect on the Group’s reputation and brand which may make it more difficult for the Group to market its products in the future.

 

Implementation of the Restructuring may breach certain of the Group’s contractual obligations

 

There is a risk that the proposal or the implementation of the Restructuring, or the taking of any steps required to implement the Restructuring, may constitute a breach of the Group’s contractual obligations under one or more agreements. The consequences of such a breach may include the termination of such agreements which may adversely affect the results of operations and financial condition of the Group.

 

Liquidation

 

If the Scheme is unsuccessful, as a result of a failure to obtain the statutory majorities or the Bermuda Court’s sanction, the entry of the Chapter 15 Recognition Order, or for any other reason, there is a possibility that the Petition presented by the Company on April 28, 2020 and subsequently adjourned would proceed to a substantive hearing at which point a winding up-order could be made. The Provisional Liquidators would then be appointed to liquidate the Company’s assets for distribution in accordance with the priorities established by the Companies Act and the Companies (Winding Up) Rules 1982. Please refer to the KPMG Liquidation Analysis Report for a detailed discussion of the effects that a winding-up in Bermuda would have on the recoveries of DGL1 Scheme Creditors.

 

2.OTHER RISK FACTORS

 

For additional risk factors, including those related to the Company’s business, DGL1 Scheme Creditors should refer the section entitled “Risk Factors” of the Tender Offer Memorandum, which is hereby incorporated by reference.

 

49 

 

Part E

 

Information on DGL0.5 and Additional Information on the Scheme

 

1.Description of the Ordinary Share Capital of DGL0.5

 

The information below assumes sanction of the Scheme and the occurrence of the Founder Equity Contribution.

 

1.1The objects of DGL0.5 are unrestricted, and it has the capacity of a natural person. DGL0.5 can therefore undertake activities without restriction on its capacity.

 

1.2Upon incorporation, the issued share capital of DGL0.5 consisted of 1,000 common shares of par value $1.00 each. In recognition of the Founder Equity Contribution, on or around the Scheme Effective Date, DGL0.5 shall issue a further 50,000,000 of common shares to Digicel Investments, its sole shareholder.

 

1.3Holders of common shares in DGL0.5 have no pre-emptive, redemption, conversion or sinking fund rights. Holders of common shares in DGL0.5 are entitled to one vote per share on all matters submitted to a vote of holders of common shares. Unless a different majority is required by law or by the bye-laws of DGL0.5, resolutions to be approved by holders of common shares require approval by a simple majority of votes cast at a meeting at which a quorum is present.

 

1.4In the event of a liquidation, dissolution or winding up of DGL0.5, the holders of common shares are entitled to share equally and rateably in DGL0.5’s assets, if any, remaining after the payment of all of its debts and liabilities.

 

1.5The bye-laws of DGL0.5 provide that its board of directors shall consist of such number of directors as the members may determine. Directors shall be elected, except in the case of a casual vacancy, at the annual general meeting or at any special general meeting called for that purpose, and shall hold office for such term as the members may determine or, in the absence of such determination, until the next annual general meeting or until their successors are elected or appointed or their office is otherwise vacated.

 

1.6Section 98 of the Bermuda Companies Act provides generally that a Bermuda company may indemnify its directors, officers and auditors against any liability which by virtue of any rule of law would otherwise be imposed on them in respect of any negligence, default, breach of duty or breach of trust, except in cases where such liability arises from fraud or dishonesty of which such director, officer or auditor may be guilty in relation to the company. Section 98 further provides that a Bermuda company may indemnify its directors, officers and auditors against any liability incurred by them in defending any proceedings, whether civil or criminal, in which judgment is awarded in their favour or in which they are acquitted or granted relief by the Bermuda Court pursuant to Section 281 of the Bermuda Companies Act. The bye-laws of DGL0.5 provide that it shall indemnify its officers and directors in respect of their actions and omissions, except in respect of their fraud or dishonesty, and that it shall advance funds to its officers and directors for expenses incurred in their defense upon receipt of an undertaking to repay the funds if any allegation of fraud or dishonesty is proved. The bye-laws of DGL0.5 provide that the members waive all claims or rights of action that they might have, individually or in right of the company, against any of DGL0.5’s directors or officers for any act or failure to act in the performance of such director’s or officer’s duties, except in respect of any fraud or dishonesty of such director or officer.

 

1.7Since incorporation of DGL0.5, other than an increase of its authorised share capital to permit the Founder Equity Contribution, there have been no material changes to its share capital or mergers, amalgamations or consolidations of DLG0.5. There have been no bankruptcy, receivership or similar proceedings with respect to DGL0.5.

 

50 

 

2.Material Interests of Directors

 

2.1The following table sets forth certain information known to the Company as of the date of this Explanatory Statement with respect to beneficial ownership of the common shares of DGL0.5 by: (i) its Chairman, Denis O’Brien; (ii) directors other than Mr. O’Brien, and (iii) other option holders.

 

Except as otherwise indicated, the holders listed below have sole voting and investment power with respect to all shares beneficially owned by them. The holders listed below have the same voting rights as the holders of DGL0.5’s common shares. For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares as of a given date which such person or group of persons has the right to acquire within 60 days after such date. For purposes of computing the percentage of outstanding shares held by each person, or group of persons, named below on a given date, any security which such person or persons has the right to acquire within 60 days after such date (including shares which may be acquired upon exercise of vested portions of stock options) is deemed to be outstanding, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person.

 

Identity of Person or Group  Percent of
Common Shares Owned
  Percent of Common Shares Owned on a Fully Diluted Basis
Denis O’Brien and Family    99.94%   99.94%
Other Directors(1)    0.06%   0.06%
Other Option Holders(1)    0%   0%

 

 

 

(1)There are currently no options outstanding.

 

3.dgl0.5 perpetual convertible notes

 

In the event the Tender Offer to holders of the Existing DGL2 2024 Notes is consummated, DGL0.5 will issue Perpetual Convertible Notes in consideration for holders tender their Existing DGL2 2024 Notes for cancellation. These Perpetual Convertible Notes may, subject to their terms and conditions, convert into common shares of DGL0.5. Assuming a 100% participation in the Tender Offer for the Existing DGL2 2024 Notes and 100% conversion of the Perpetual Convertible Notes into the common shares of DGL0.5, holders of the Perpetual Convertible Notes will collectively own 49% of the common shares DGL0.5 on a fully diluted basis. A description of the Perpetual Convertible Notes is included in the section entitled “Description of the Convertible Notes” in the Tender Offer Memorandum, which is hereby incorporated by reference.

 

4.Management

 

Board of Directors of DGL0.5

 

4.1The following table lists the directors of DGL0.5 as of the date of this Explanatory Statement. Unless otherwise stated, the business address for all members of the DGL0.5 Board of Directors is c/o Digicel, Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.

 

Name

Position 

Denis O’Brien Chairman
Leslie Buckley Vice Chairman
Lucy Gaffney Member
Seamus Lynch Member
Gregory Sparks Member
Sir Julian Horn-Smith Member
Sean Corkery Member
Jean-Yves Charlier Member
Kaan Terzioğlu Member

 

 

51 

 

4.2Short biographies of each director are found in the section entitled “Management” of the Tender Offer Memorandum, which is hereby incorporated by reference.

 

Compensation

 

4.3The aggregate amount of compensation paid or payable during the six months ended September 30, 2019 by the Group, excluding amounts recognized as share compensation expense, was $2.1 million to the directors (including the Chairman of the Board of Directors but excluding those directors who are also members of the senior management) and $2.7 million to the Group’s senior management.

 

4.4The Group periodically establishes equity-based incentive compensation programs, in which the senior management and directors are eligible to participate. In July 2016, the equity-based incentive compensation programs in existence at that time were canceled (i.e., the 2013 option schemes and the 2013 phantom share scheme) in exchange for cash payments. As of September 30, 2019, there are no options outstanding under such plans and the Group has no further Liability under either of these schemes.

 

4.5During fiscal 2018, the Group approved the introduction of a new equity-based compensation program called the “Digicel Group Limited 2017 Long Term Incentive Plan.” Options over 6,524,000 shares were issued during Fiscal Year 2018 but these options were cancelled with effect from January 31, 2020. There are currently no options issued under the “Digicel Group 2017 Long Term Incentive Plan” or under any other option plan.

 

4.6None of the directors have entered into service agreements with DGL0.5 that provide for benefits upon termination of their directorship.

 

5.RELATED PARTY TRANSACTIONS

 

The Group has entered into certain agreements with entities affiliated with beneficial owners of DGL0.5. DGL0.5 is expected to become party to and/or benefit from these agreements, each of which is described in the section entitled “Certain Relationships and Related Party Transactions” of the Tender Offer Memorandum which is hereby incorporated by reference.

 

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6.Costs in Relation to the Scheme

 

6.1The Company has agreed to meet certain costs, charges, expenses and disbursements reasonably incurred by the Existing Notes Trustee, the Information Agent, the Company’s advisors, KPMG IE, the Provisional Liquidators, the Ad Hoc Group and the advisors to the Ad Hoc Group in connection with the negotiation, preparation and implementation of the Scheme and as agreed in advance with the Company. Further details of the fees payable to the Ad Hoc Group are set out in Part A (Background to the Scheme) of this Explanatory Statement.

 

53 

 

Part F

 

THe Scheme

 

54 

 

 

 

IN THE SUPREME COURT OF BERMUDA

 

CIVIL JURISDICTION

 

(COMMERCIAL COURT)

 

2020 No. 149

 

IN THE MATTER OF THE COMPANIES ACT 1981

 

IN THE MATTER OF DIGICEL GROUP ONE LIMITED

 

____________________________________________________

 

SCHEME OF ARRANGEMENT

 

(under section 99 of the Companies Act 1981)

 

BETWEEN

 

DIGICEL GROUP ONE LIMITED

 

(in provisional liquidation)

 

AND

 

THE DGL1 SCHEME CREDITORS

 

____________________________________________________

 

55 

 

CONTENTS

 

TABLE OF CONTENTS

 

Page

  

1     Definitions and Interpretation 57
2     The Company 68
3     The Purpose of the Scheme 68
4     The Existing Notes 68
5     The Existing Notes Trustee and the Scheme 69
6     Application and Effectiveness of the Scheme 70
7     The Scheme 70
8     No Right to Commence Proceedings 72
9     Instructions, Authorisations and Directions 72
10   DGL1 Scheme Creditor Undertakings and Releases 74
11   Determination of Scheme Claims 76
12   Sales, Assignments or Transfers 76
13   Provision of information 76
14   The Information Agent 76
15   Conditions to the Effectiveness of the Scheme 77
16   Termination of the Scheme 78
17   Securities Law Considerations 78
18   Scheme Costs 78
19   Modifications of the Scheme 78
20   Notices 78
21   Conflict and Inconsistency 80
22   Governing Law and Jurisdiction 80

 

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1Definitions and Interpretation

 

1.1In this Scheme:

 

Ad Hoc Group means that certain ad hoc group of DGL1 Noteholders party to and as defined in the Lockup and Support Agreement.
Advisors means collectively, ASW, Conyers, Davis Polk, DC Advisory, KPMG IE, PJT, Weil, and the Information Agent.
Affiliates

means:

 

(a)          a company that directly or indirectly owns, controls, or holds with power to vote, 50 percent or more of the outstanding voting securities of the other company, other than an entity that holds such securities:

 

(i)         in a fiduciary or agency capacity without sole discretionary power to vote such securities; or

 

(ii)        solely to secure a debt, if such entity has not in fact exercised such power to vote;

 

(b)          a company 50 percent or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by another company, or by an entity that directly or indirectly owns, controls, or holds with power to vote, 50 percent or more of the outstanding voting securities of the other company, other than an entity that holds such securities—

 

(i)         in a fiduciary or agency capacity without sole discretionary power to vote such securities; or

 

(ii)        solely to secure a debt, if such entity has not in fact exercised such power to vote;

 

(c)           a person whose business is operated under a lease or operating agreement by the other company, or person substantially all of whose property is operated under an operating agreement with the other company; or

 

an entity that operates the business or substantially all of the property of the other company under a lease or

 

 

57 

 

 

  operating agreement.
Asset Transfer means the transfer by the Company to DGL0.5 of substantially all of its assets and liabilities as shown in the Balance Sheet (but excluding for the purposes of this definition the Existing Notes) including, without limitation, all of the Company’s intra-Group receivables and payables, all of the Company’s equity interests in its subsidiaries, all of the Company’s cash and, to the extent permitted without consent or to the extent consent is received from the relevant third party, all of the Company’s trade and other payables, each of the foregoing occurring either pursuant to the Section 101 Order or the Sale Documents, but in all cases excluding any Third Party Liabilities.
ASW means ASW Law Limited.
“Balance Sheet means unaudited balance sheet of the Company as of March 2020, as appended to the Explanatory Statement.
Beneficial Interest means an interest (whether or not it is the ultimate economic interest) in the principal amount outstanding of the Existing Notes, which interest is held (directly or indirectly) in book-entry form through DTC, a DTC Participant and/or another Intermediary.
Bermuda Registrar of Companies means the Registrar of Companies appointed under section 3 of the Companies Act.
Business Day means any day on which banks are open for business generally in New York and Bermuda.
Claim means all and any actions, causes of action, claims, counterclaims, suits, debts, sums of money, accounts, contracts, agreements, promises, damages, judgments, executions, demands, remedies or rights whatsoever or howsoever arising, whether present, future, prospective (including after the Scheme Effective Date) or contingent, known or unknown, whether or not for a fixed or unliquidated amount, whether or not involving the payment of money or the performance of an act or obligation or any failure to perform any obligation or any omission, whether assertable directly or derivatively, whether arising at common law, contract, tort, in equity or by statute in or under the laws of New York or Bermuda, or under any other law or in any other jurisdiction howsoever arising, other than Excluded Claims and “Claims” shall be

 

 

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  construed accordingly.
Companies Act means the Companies Act 1981 of Bermuda.
Company means DGL1.
Company Payable means the liability of the Company to DGL0.5 arising due to DGL0.5’s holding of the Beneficial Interest in the Existing Notes following the transfer of the Existing Notes by DGL1 Scheme Creditors to DGL0.5 pursuant to the Transfer Mechanics.
Company Receivable means the receivable in favour of the Company owed by DGL0.5 arising due to the Asset Transfer.
Convening Order means order of the Court containing directions for the convening of a meeting of DGL1 Scheme Creditors.
Conyers means Conyers Dill & Pearman Limited.
Court means the Supreme Court of Bermuda.
Davis Polk means Davis Polk & Wardwell LLP.
“DGL0.5” means Digicel Group 0.5 Limited, an exempted company incorporated in Bermuda with registration number 55491 and its registered office at Clarendon House, 2 Church Street, Hamilton, Bermuda.
DGL0.5 Receivable” means the balance owing by the Company to DGL0.5 following the set-off of the Company Payable against the Company Receivable as described in Step 2 of the Transfer Mechanics.
DGL1” means Digicel Group One Limited, an exempted company incorporated in Bermuda with registration number 53897 and its registered office at Clarendon House, 2 Church Street, Hamilton, Bermuda.
DGL1 Noteholder means a person who has a Beneficial Interest in the Existing Notes and who is the owner of the ultimate economic interest in any of the Existing Notes, and who has the right, upon satisfaction of certain conditions, to be issued definitive certificates in accordance with the terms of the Existing Notes Indenture.
DGL1 Scheme Consideration means for each US$1,000 in principal amount of Existing Notes: US$941 in principal amount of New DGL0.5 Secured Notes.
DGL1 Scheme means DGL1 Noteholders and (without double

 

 

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Creditors” counting in each case), the Existing Depository Nominee and the Existing Notes Trustee.
DTC means The Depository Trust Company.
DTC Participant means the person recorded directly in the records of DTC as holding a Beneficial Interest in any Existing Notes in an account held with DTC, either for that person’s own account or on behalf of another person.
Excluded Claims means (i) Scheme Costs; (ii) Claims under or in connection with DGL1 Scheme Consideration; (iii) Claims in respect of rights created under the Scheme and/or which arise as a result of a failure by DGL1 or any party to the Scheme to comply with any terms of the Scheme from and after the Scheme Effective Date; and (iv) any Claims arising from or relating to fraud or dishonesty.
Existing Depository Nominee means Cede & Co as the entity in whose name the Existing Notes are registered and who acts as the depository and nominee for DTC with respect to the Existing Notes.
Existing Notes means the 8.250% Senior Notes due 2022 issued by DGL1 pursuant to the Existing Notes Indenture.
Existing Notes Indenture means the indenture dated January 14, 2019, between DGL1 and Deutsche Bank Trust Company Americas, as trustee, pursuant to which the Existing Notes were constituted and issued.
Explanatory Statement means that composite document mailed to DGL1 Scheme Creditors (including all appendices) pursuant to an order of the Court prior to the Scheme Meeting.
Existing Notes Trustee means Deutsche Bank Trust Company Americas, in its capacity as indenture trustee, and in each other capacity for which it serves, under or in connection with the Existing Notes Indenture; provided that if the context requires only certain of the foregoing capacities, then only in such capacity(ies).
Existing Notes Trustee’s Fees and Expenses means the reasonable and documented compensation, fees, expenses, disbursements and indemnity claims, including without limitation, attorneys’ fees, expenses and disbursements, incurred by the Existing Notes Trustee in any and all capacities to the extent payable or reimbursable under the Existing Notes Indenture or related documents.

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Foreign Representative means the Provisional Liquidators.
Founder Equity Contribution means a commitment by Denis O’Brien to cause Digicel Investments Limited, an entity controlled by him, to contribute $50.0 million in aggregate consideration comprised of $25.0 million in cash and the entirety of Onnut Ventures Limited’s ordinary share capital; and shareholder loans in exchange for 50 million common shares issued by DGL0.5, in the event that the Scheme is consummated.
Group” means Digicel Group Limited and its subsidiaries.
Information Agent means Epiq Corporate Restructuring, LLC.
Instruction Packet means the packet of materials, comprising the forms of ballots for voting and the Explanatory Statement.
Intermediary means a person who is not a DGL1 Noteholder but who holds a Beneficial Interest in the Existing Notes on behalf of another person or persons.
KPMG IE has the meaning given to that term in the Explanatory Statement.
Liability” or “Liabilities

means any debt, liability or obligation of a person whether it is present, future, prospective, actual or contingent, whether it is fixed or undetermined, whether incurred solely or jointly or as principal or surety or in any other capacity, whether or not it involves the payment of money or performance of an act or obligation and whether it arises at common law, in equity or by statute, in Bermuda or any other jurisdiction, or in any manner whatsoever.

 

Lockup and Support Agreement means that certain lockup and support agreement dated as of  April 1, 2020, between, inter alia, members of the Ad Hoc Group and the Company.
Longstop Time means September 1, 2020 at 5:00 pm (New York Time) or such later date and time agreed in writing by the Company and the Ad Hoc Group.
New DGL0.5 Indenture means the indenture to be entered into between DGL0.5 Limited and the New Notes Trustee pursuant to which the New DGL0.5 Secured Notes will be issued on terms substantially consistent with the description of notes contained in the Tender Offer Memorandum appended to the Explanatory Statement.

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New DGL0.5 Secured Notes means the new DGL0.5 senior secured notes, which will be issued by DGL0.5 pursuant to the New DGL0.5 Indenture and will mature on April 1, 2024. Each New DGL0.5 Secured Notes will bear 8.0% cash interest per annum, payable semi-annually in arrears on each April 1 and October 1, beginning on the first date after the Settlement Date (as defined in the Tender Offer Memorandum). Cash interest will accrue from March 30, 2020. In addition, interest in addition to the cash interest shall be paid by issuing additional new DGL0.5 senior secured notes (rounded up to the nearest US$1.00) (“PIK Interest”). PIK Interest on the new DGL0.5 senior secured notes will accrue at a rate of 2.0% per annum from March 30, 2020. DGL0.5 may, at its option, pay 10.0% PIK Interest with no cash interest on the first two interest payments following the Settlement Date, as described in the description of notes of the Tender Offer Memorandum appended to the Explanatory Statement.
New DGL0.5 Secured Notes Collateral

means the first-priority liens on (i) all share capital (including warrants to acquire shares) of Digicel Pacific Limited, (ii) all share capital (including warrants to acquire shares) of Digicel Limited, (iii) DGL0.5’s receivable under the Digicel (Central America) Group Limited Credit Facility and (iv) all share capital of Digicel (PNG) Limited owned by Digicel Pacific Limited.

 

New Notes Trustee means Deutsche Bank Trust Company Americas as trustee for the New DGL0.5 Secured Notes.
Personnel means, in relation to any person, its current and former officers, directors, managers, principals, members, employees, agents, advisory board members, financial advisors, partners, attorneys, accountants, investment bankers, consultants, representatives, and other professionals.
PIK Interest means payment-in-kind interest which will be paid in addition to the cash interest by increasing the principal of the outstanding New DGL0.5 Secured Notes or by issuing additional New DGL0.5 Secured Notes (rounded up to the nearest US$1.00) pursuant to the terms of the New DGL0.5 Secured Notes.
PJT means PJT Partners.
Pledge Agreement means that certain pledge agreement dated as of  January 14, 2019, between the Company and the

 

 

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  Existing Notes Trustee, pursuant to which the Company pledged its interest in, amongst other things, its shares in Digicel Pacific Limited and warrants in Digicel Holdings (Central America) Limited and its interests as creditor in the credit agreement originally dated as of December 22, 2008 (as amended and restated from time to time) between the Company and Digicel (Central America) Group Limited.
Post means delivery by pre-paid first class post or air mail or generally recognized commercial courier service, and “Posted” shall be construed accordingly.
Proceeding means any process, action, legal or other proceeding including any arbitration, mediation, alternative dispute resolution, judicial review, adjudication, demand, execution, distraint, forfeiture, re-entry, seizure, lien, enforcement of judgment or enforcement of any security or other right.
Provisional Liquidators has the meaning given to that term in the Explanatory Statement.
Record Date means close of business on May 13, 2020 (New York time).
Registrar of Companies means the Registrar of Companies of Bermuda appointed pursuant to the Companies Act.
Released Claim means any past, present and/or future Claim arising out of, relating to or in respect of: (i) the  Existing Notes Indenture, (ii) the Existing Notes; (iii) the Scheme Claims and any of the facts and matters giving rise to the Scheme Claims; (iv) the Transfer Mechanics and Sale Documents (but excluding for the purposes of (iv) of this definition any Claims held by DGL0.5); and/or (v) all actions and/or decisions taken by any Released Person prior to the Scheme Effective Date in connection with the management and/or business of the Company, (but excluding any action and/or decision taken in connection with the management and/or business of any Affiliate of the Company) the preparation, negotiation, sanction or implementation of the Scheme, the Restructuring Documents and the Restructuring, and the execution and the carrying out of the steps and transactions contemplated therein in accordance with their terms, other than in each case, Excluded Claims.

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Released Person means (i) the Company, (ii) the Existing Notes Trustee, (iii) the members of the Ad Hoc Group; (iv) the Provisional Liquidators, (v) with respect to each of the foregoing entities in clauses (i) through (iii), its Affiliates and Advisors, and with respect to each of the foregoing entities in clauses (i), (ii), (iii) and (v), each of their Personnel.
Restructuring has the meaning given to that term in the Explanatory Statement.
Restructuring Documents means the New DGL0.5 Secured Notes, all security documents required to give effect to the New DGL0.5 Secured Notes Collateral, the New DGL0.5 Indenture, the Sale Documents (only to the extent the Section 101 Order is not received) and any other ancillary documents reasonably required to effectuate the terms of the Scheme.
Sale Documents means (i) the Omnibus Asset Transfer and Contribution Agreement between the Company and DGL0.5; (ii) the Repayment and Waiver Agreement between the Company and DGL0.5; (iii) Assignment of Warrants Agreement in respect of the Company’s warrants in Digicel Holdings Central America Limited delivered by the Company in favour of DGL0.5; (iv) an amendment and restated agreement in respect of the loan agreement between the Company and Digicel (Central America) Group Limited; and (v) any and all contracts, notices, resolutions or certificates to be executed by the Company to transfer all of the Company’s assets and Liabilities to DGL0.5.
Sanction Order means the order of the Court sanctioning the Scheme (with or without modification).
Scheme means this scheme of arrangement between the DGL1 Scheme Creditors and the Company pursuant to section 99 of the Companies Act in its present form or subject to any modifications, additions, or conditions that the Court may approve or impose consistent with Clause 19 of this scheme.
Scheme Claim means any Claim of a DGL1 Scheme Creditor against the Company arising directly or indirectly out of, in relation to and/or in connection with the Existing Notes, the Pledge Agreement and/or the Existing Notes Indenture, whether before, at or after the Record Date (provided that for voting purposes Scheme Claims shall be determined by reference to

 

 

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  the principal amount of Existing Notes excluding any accrued interest or other amounts due pursuant to the Existing Notes or the Existing Notes Indenture), other than, in each case, Excluded Claims.
Scheme Costs means the Liability of the Company in respect of the fees, costs and expenses of the Advisors and the Existing Notes Trustee’s Fees and Expenses, which Liabilities are not subject to the arrangements and compromises to be effected by the Scheme.
Scheme Creditor Parties means, in respect of a DGL1 Scheme Creditor, each of its predecessors, successors, assigns, transferees, Affiliates and Personnel, in each case other than DGL0.5.
Scheme Effective Date means the date upon which all of the conditions to the effectiveness of the Scheme as set forth in Clause 15 of this Scheme have been satisfied.
Scheme Meeting means the meeting convened to consider, and if thought fit, approve the Scheme pursuant to a direction of the Court on May 12, 2020.
Scheme Website means https://dm.epiq11.com/Digicel.
SEC means the U.S. Securities and Exchange Commission.
Section 101 Order means an order by the Court pursuant to section 101 of the Companies Act (whether forming part of the Sanction Order or otherwise) pursuant to which the Asset Transfer shall occur.
Third Party Liabilities means any existing, identified and non-contingent liabilities of DGL1 as of the Scheme Effective Date that are not transferred pursuant to the Transfer Mechanics.
Transfer Mechanics means the steps described in Clause 7.1 of the Scheme.
Tender Offer Memorandum means the offering memorandum and consent and waiver solicitation statement relating to the Existing Notes dated as of April 1, 2020 and forming part of the Explanatory Statement.
United States Code means the Code of Laws of the United States of America.
US Bankruptcy Code means title 11 of the United States Code.

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US Bankruptcy Court means the United States Bankruptcy Court for the Southern District of New York.
US Securities Act means U.S. Securities Act of 1933, as amended, including the rules and regulations promulgated by the SEC thereunder.
Weil means Weil, Gotshal & Manges LLP.

 

1.2In this Scheme, unless the context otherwise requires or otherwise expressly provides:

 

(a)references to Recitals, Parts, Clauses, Sub-Clauses, Schedules and Appendices are references to the recitals, parts, clauses, sub-clauses, schedules and appendices respectively of or to the Scheme;

 

(b)references to a “person” include references to an individual partnership, company, corporation, other legal entity, unincorporated body of persons or any state or state agency;

 

(c)references to a statute or a statutory provision include the same as subsequently modified, amended or re-enacted from time to time;

 

(d)references to an agreement, deed or document shall be deemed also to refer to such agreement, deed or document as amended, supplemented, restated, verified, replaced and/or novated (in whole or in part) from time to time and to any agreement, deed or document executed pursuant thereto;

 

(e)the singular includes the plural and vice versa and words importing one gender shall include all genders;

 

(f)headings to Recitals, Parts, Clauses and Sub-Clauses are for ease of reference only and shall not affect the interpretation of the Scheme;

 

(g)references to “$” or “US$” are references to the lawful currency of the United States of America;

 

(h)the words “include” and “including” are to be construed without limitation, general words introduced by the word “other” are not to be given a restrictive meaning by reason of the fact that they are preceded by words indicating a particular class of acts, matters or things and general words are not to be given a restrictive meaning by reason of the fact that they are followed by particular examples intended to be embraced by the general words;

 

(i)a company is a “subsidiary” of another company, its “holding company”, if that other company: (a) holds a majority of the voting rights in it; (b) is a member of it and has the right to appoint or remove a majority of its board of directors; or (c) is a member of it and controls alone, pursuant to an agreement with other members, a majority of the voting rights in it, or, if it is a subsidiary of a company that is itself a subsidiary of that other company; and

 

(j)an “undertaking” means a body corporate or partnership; or an unincorporated association carrying on a trade or business, with our without a

 

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view to profit; and an undertaking is a parent undertaking in relation to another undertaking, a “subsidiary undertaking”, if: (a) it holds the majority of voting rights in the undertaking; (b) it is a member of the undertaking and has the right to appoint or remove a majority of its board of directors; (c) it has the right to exercise a dominant influence over the undertaking: (i) by virtue of provisions contained in the undertaking's articles; or (ii) by virtue of a control contract; or (d) it is a member of the undertaking and controls alone, pursuant to an agreement with other shareholders or members, a majority of the voting rights in the undertaking.

 

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PART A
Recitals

 

2The Company

 

2.1DGL1 was incorporated in Bermuda under the Companies Act as an exempted company with limited liability on August 20, 2018 with registration number 53897 under the name “Digicel Group Two Limited” and changed its name to “Digicel Group One Limited” on September 7, 2018.

 

2.2The Company’s registered office is at Clarendon House, 2 Church Street, Hamilton, HM11, Bermuda.

 

2.3The authorised share capital of DGL 1 is US$10,000 consisting of 10,000 common shares of US$1.00 each of which 1,000 were issued.

 

3The Purpose of the Scheme

 

3.1The principal object and purpose of the Scheme is to effect a compromise and arrangement between the Company and the DGL1 Scheme Creditors in respect of the Scheme Claims. The arrangement and compromise effected pursuant to the Scheme will, in conjunction with the Asset Transfer, result in significant deleveraging of the Group and will enable DGL0.5 to carry on the business of the Company as a going concern.

 

3.2On the Scheme Effective Date, among other things, the Existing Notes will be cancelled and discharged as part of the Transfer Mechanics and all rights and obligations of any party under the Existing Notes and Existing Notes Indenture (including, for the avoidance of doubt, any person that acquires an interest in the Existing Notes after the Record Date) will terminate.

 

3.3The Foreign Representative is authorised to make an application on behalf of the Company for a suitable order from the US Bankruptcy Court under Chapter 15 of the US Bankruptcy Code (or under any other applicable law, legal doctrine or Proceeding concerning cross-border recognition) and such other additional relief and/or assistance as the Foreign Representative may be required by the Company to obtain.

 

4The Existing Notes

 

The Existing Notes are held under customary arrangements whereby:

 

(a)the Existing Notes were issued pursuant to the Existing Notes Indenture;

 

(b)all Existing Notes are registered in the name of the Existing Depository Nominee;

 

(c)Beneficial Interests in the Existing Notes are held initially by DTC Participants (whose identities are recorded directly in the books or other records maintained by DTC) through DTC, under electronic systems designed to facilitate paperless transactions in respect of dematerialised securities; and

 

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(d)each DTC Participant may be holding its recorded Beneficial Interest in the Existing Notes (in full or in part) either on its own behalf or on behalf of another person, which person may in turn also be holding such interest on its own behalf or on behalf of another person.

 

5The Existing Notes Trustee and the Scheme

 

5.1The Court has ordered that neither the Existing Notes Trustee nor the Existing Depository Nominee (as registered holder of the Existing Notes) shall be entitled to vote in respect of the Existing Notes at the Scheme Meeting and, accordingly, they will not vote at such meeting.

 

UNDERTAKINGS

 

5.2DGL0.5 has undertaken to the Court to abide by the terms of the Scheme and to be bound by its terms insofar as they apply to it.

 

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PART B
The Scheme

 

6Application and Effectiveness of the Scheme

 

6.1The compromises and arrangement effected by the Scheme herein shall apply to all Scheme Claims and shall be binding on all DGL1 Scheme Creditors.

 

6.2The terms of the Scheme shall become effective on the Scheme Effective Date and shall take effect in accordance with the terms of the Scheme.

 

6.3The Company shall promptly notify the Information Agent of the occurrence of the Scheme Effective Date by providing a form of notice to the Information Agent, and the Information Agent shall notify DGL1 Scheme Creditors of the Scheme Effective Date by:

 

(a)providing such notice to the Existing Notes Trustee;

 

(b)circulating such notice to DGL1 Scheme Creditors via DTC; and

 

(c)posting such notice on the Scheme Website.

 

7The Scheme

 

7.1On the Scheme Effective Date, the Transfer Mechanics shall occur through the following steps, each of which is interconditional on the other and each of which shall occur immediately after the preceding step, such that all steps occur upon the Scheme Effective Date.

 

Step 1

 

The Existing Notes shall be deemed transferred without any further act or action by any DGL1 Scheme Creditor to DGL0.5 in consideration for DGL0.5 issuing the DGL1 Scheme Consideration pro rata to each DGL1 Scheme Creditor based upon the principal amount of Existing Notes held by the relevant DGL1 Scheme Creditor. DGL0.5 shall become a creditor of the Company in an amount equal to the Company Payable. DGL0.5 shall make available to DTC on the Scheme Effective Date the DGL1 Scheme Consideration for payment to the DGL1 Scheme Creditors through an exchange of the Existing Notes for the New DGL0.5 Secured Notes anticipated to be performed by DTC in accordance with its customary practices and procedures on or as soon as practicable after the Scheme Effective Date.

 

Step 2

 

The Asset Transfer will occur either pursuant to a Section 101 Order or the Sale Documents. The net value transferred by the Company to DGL0.5 pursuant to the Asset Transfer will create the Company Receivable. The Company Payable will be immediately set-off against the Company Receivable (thereby eliminating the Company Receivable) in consideration for the Asset Transfer.

 

Step 3

 

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The DGL0.5 Receivable and all Scheme Claims shall be released and compromised as follows:

 

(a)the Existing Notes, the Existing Notes Indenture, the Pledge Agreement and all other related instruments, certificates, agreements and other documents will be cancelled, released, terminated, extinguished and discharged without any further act or action by the Company, DGL0.5, the Existing Notes Trustee or any DGL1 Scheme Creditor; provided, however, that such documents shall continue in effect for the limited purpose of (i) allowing the DGL1 Scheme Creditors to receive their respective DGL1 Scheme Consideration, and (ii) preserving all rights of the Existing Notes Trustee thereunder, including with respect to the Existing Notes Trustee’s Fees and Expenses.

 

(b)the Existing Notes shall be deemed surrendered without any further act or action by the Company, DGL0.5 or any DGL1 Scheme Creditor;

 

(c)all of the rights, title and interest of the DGL1 Scheme Creditors in respect of Scheme Claims (including for the avoidance of doubt, those of Scheme Creditor Parties), or in respect of any Claims against DGL0.5 under or related to the Existing Notes arising pursuant to the Transfer Mechanics, shall be subject to each of the arrangements and compromises set out in this Scheme;

 

(d)the respective rights and obligations of the DGL1 Scheme Creditors (including, for the avoidance of doubt, any person that acquires an interest in the Existing Notes after the Record Date), the Company, DGL0.5 and the Existing Notes Trustee towards one another under the Existing Notes Indenture and the Existing Notes shall be deemed fully satisfied, discharged and terminated; provided, however, that such rights and obligations shall continue for the limited purpose of (i) allowing the applicable DGL1 Scheme Creditors to receive their respective DGL1 Scheme Consideration under the Scheme, and (ii) preserving all rights of the Existing Notes Trustee thereunder, including with respect to the Existing Notes Trustee’s Fees and Expenses.

 

7.2The Company hereby undertakes that to the extent any Third Party Liabilities are not transferred to DGL0.5 pursuant to the Transfer Mechanics, then the Company shall either procure the transfer of such Third Party Liabilities to DGL0.5 or shall make provision for payment in full of such Third Party Liabilities on or after the Scheme Effective Date.

 

7.3              On or as soon as practicable after the Scheme Effective Date, the Company and DGL0.5 shall:

 

(a)take any action(s) to ensure that the global notes representing the Existing Notes are cancelled; and

 

(b)give any instructions and consents to the Existing Notes Trustee and DTC, as applicable, that may be required of the Company or DGL0.5 to accomplish the exchange of the Existing Notes for the New DGL0.5 Secured Notes identified in “Step 1” of Clause 7.1 (which exchange, for the avoidance of doubt, is anticipated to be performed by DTC in accordance with its customary

 

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practices and procedures on or as soon as practicable after the Scheme Effective Date) and to accomplish sub-clause (a) set forth immediately above.

 

7.4On the Scheme Effective Date, the Section 101 Order shall be deemed to be incorporated in and form part of the Scheme and the transfers contemplated by the Section 101 Order shall occur, provided that if the Court refuses to give the Section 101 Order, the Company will instead execute the Sale Documents and implement the Asset Transfer pursuant to the authority conferred by and the instructions contained in Clause 9.

 

8No Right to Commence Proceedings

 

8.1From and after the Scheme Effective Date, no person or entity, including, without limitation, the Scheme Creditor Parties shall be entitled to commence, continue, threaten or procure the commencement or continuation of any Proceeding, whether directly or indirectly, against any of the Released Persons or in respect of any property of any of the Released Persons in respect of any Released Claim.

 

8.2The Company shall be fully entitled to enforce Clause 8.1 of the Scheme in its own names, as applicable.

 

8.3Each Released Person shall be fully entitled to enforce Clause 8.1 of the Scheme in its own name, (whether by way of a Proceeding or by way of defense or estoppel (or similar theory) in any jurisdiction whatsoever) as if it were a party hereto, pursuant to the provisions of the Contracts (Rights of Third Parties) Act 2016 of Bermuda and/or any other applicable law which so permits.

 

8.4Each DGL1 Scheme Creditor is deemed to acknowledge that if it, or any person claiming through it (including any Scheme Creditor Parties), takes any Proceedings against any Released Persons in breach of Clause 8.1 of the Scheme, the Released Person shall be entitled to obtain an order as of right staying those Proceedings and providing for payment, by the DGL1 Scheme Creditor (and/or to the extent applicable, any Scheme Creditor Parties) concerned and any person claiming through it, of any costs, charges or other expenses howsoever incurred by such Released Person as a result of or in connection with taking such Proceedings on a full indemnity basis.

 

9Instructions, Authorisations and Directions

 

9.1Each DGL1 Scheme Creditor in respect of its interest in the Existing Notes hereby irrevocably authorizes and instructs DTC and the Existing Notes Trustee to, on or after the Scheme Effective Date, take whatever action is necessary or reasonably appropriate to give effect to the terms of the Scheme.

 

9.2On and from the Scheme Effective Date, in consideration of the rights provided to the DGL1 Scheme Creditors under the Scheme and notwithstanding any term of any relevant document, each DGL1 Scheme Creditor hereby appoints the Company in respect of any and all Scheme Claims arising under or in connection with the Existing Notes, the Pledge Agreement or the Existing Notes Indenture as its attorney and agent and irrevocably authorises, directs, instructs and empowers the Company (represented by any authorised representative) to:

 

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(a)enter into, execute and deliver (whether as a deed or otherwise) for and on behalf of each DGL1 Scheme Creditor the Restructuring Documents to which the DGL1 Scheme Creditors, or any of them, are named as a party and any other document referred to, contemplated by or ancillary to any of the foregoing; and

 

(b)take whatever action is necessary to ensure that the books and records of DTC are updated to reflect the terms of the Scheme, including without limitation to: (i) instruct DTC to debit the Beneficial Interests relating to the Existing Notes from the relevant DTC Participants; (ii) authorise the cancellation of the book entry interests in respect of the Existing Notes; and (iii) take or carry out any other step or procedure reasonably required to effect the settlement of the Scheme.

 

9.3Each DGL1 Scheme Creditor for itself and its Scheme Creditor Parties and DGL0.5 hereby for itself and its successors and assigns in respect of the Existing Notes, the Existing Notes Indenture and all other related instruments, certificates, agreements and other documents, releases, discharges and exonerates each of the Existing Notes Trustee (including its officers, agents, Affiliates, Personnel, attorneys) and Advisors from any Released Claims by the DGL1 Scheme Creditors and their Scheme Creditor Parties:

 

(a)by reason of any of them acting in accordance with the above authorisation and instruction;

 

(b)for the manner of performance of all acts carried out on such instructions save to the extent of its own gross negligence, willful default or fraud; and

 

(c)in the case of a DGL1 Scheme Creditor and DGL0.5, under the Existing Notes Indenture and the Existing Notes with effect from the Scheme Effective Date (without prejudice to any rights of the Existing Notes Trustee under the Existing Notes Indenture, the Existing Notes or related documents),

 

in each case whether or not the Company obtains a suitable order from the US Bankruptcy Court under Chapter 15 of the US Bankruptcy Code or another applicable law, legal doctrine or Proceeding concerning cross-border recognition.

 

9.4DGL0.5 and each DGL1 Scheme Creditor including on behalf of its Scheme Creditor Parties in respect of the Existing Notes, hereby acknowledges and agrees that any action taken by the Company in accordance with the Scheme and/or the Restructuring Documents will not constitute a breach of the Existing Notes, Existing Notes Indenture (or any other agreement or document governing the terms of any Scheme Claim) or the Restructuring Documents and to the extent such agreement is ineffectual or unenforceable, hereby irrevocably waives any such breach.

 

9.5The directions, instructions and authorisations granted under this Clause 9 shall be treated, for all purposes whatsoever and without limitation, as having been granted by deed and the Company shall be entitled to delegate the authority granted and conferred by this Clause 9 to any duly authorised officer or agent of the Company as necessary.

 

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10DGL1 Scheme Creditor Undertakings and Releases

 

10.1In consideration for its entitlement to the DGL1 Scheme Consideration, each DGL1 Scheme Creditor, in respect the Existing Notes, hereby gives the undertakings, releases and waivers in this Clause 10 on behalf of itself and its Scheme Creditor Parties.

 

10.2With immediate effect on and from the Scheme Effective Date, each DGL1 Scheme Creditor and its Scheme Creditor Parties and (solely in respect of clauses (b), (c)(ii) and (iii), (d) and (e) below) DGL0.5 irrevocably, unconditionally, fully and absolutely:

 

(a)waives, discharges and releases all of its rights, title and interest in and to its Scheme Claims in consideration for its entitlement to receive the DGL1 Scheme Consideration in accordance with the Scheme;

 

(b)except as otherwise expressly provided herein, waives, discharges and releases any Released Claim it may have under or in connection with the Existing Notes Indenture, the Pledge Agreement, and/or the Existing Notes against any Released Person in relation to any breaches or defaults under the Existing Notes Indenture, the Pledge Agreement and/or the Existing Notes occurring on or before the Scheme Effective Date or which may occur as a result of implementation of the Scheme;

 

(c)ratifies and confirms everything which any Released Person may lawfully do or cause to be done in accordance with any authority conferred by the Scheme and agrees not to challenge:

 

(i)the Transfer Mechanics, Sale Documents or the Section 101 Order, as the case may be, and the transactions contemplated thereby in each instance;

 

(ii)the validity of any act done or omitted to be done in good faith by any Released Person to implement the transactions and compromises contemplated hereby; or

 

(iii)the exercise or omission to exercise of any power conferred in accordance with the provisions of the Scheme in good faith by any Released Person.

 

(d)waives, releases and discharges each and every Released Claim which it ever had, may have or hereafter can, shall or may have against any Released Person; and

 

(e)undertakes to the Released Persons that it will not and shall procure that its Scheme Creditor Parties will not, directly or indirectly commence or continue, or instruct, direct or authorise any other person to commence or continue, any Proceedings in respect of or arising from any Released Claims.

 

10.3Each DGL1 Scheme Creditor acknowledges that it may later discover facts in addition to or different from those which it presently knows or believes to be true with respect to the subject matter of the Scheme, but it is its intention to fully, and finally forever

 

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settle and release any and all matters, disputes and differences, whether known or unknown, suspected or unsuspected, which presently exist, may later exist or may previously have existed between it and one or more of the Released Persons in respect of the Released Claims, and that in further of this intention, the waivers, releases and discharges given in the Scheme shall be and shall remain in effect as full and complete general waivers, releases and discharges notwithstanding the discovery or existence of any such additional or different facts.

 

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PART C
Identification of Scheme Claims

 

11Determination of Scheme Claims

 

11.1Each DGL1 Scheme Creditor shall have a Scheme Claim equivalent to the Existing Notes in which it holds a Beneficial Interest (without double counting any Beneficial Interest held through an Intermediary).

 

12Sales, Assignments or Transfers

 

12.1Neither the Company nor the Information Agent shall recognise any sale, assignment or transfer of any Scheme Claim after the Record Date for the purposes of determining entitlement to attend and vote at the Scheme Meeting.

 

12.2All distributions of DGL1 Scheme Consideration shall be made to DGL1 Scheme Creditors in accordance with Clause 7.3 above irrespective of any sale, assignment or of any Scheme Claim after the Record Date.

 

12.3A transferee of an economic, beneficial or proprietary interest in the Existing Notes after the Record Date will, however, be bound by the terms of the Scheme in the event that it becomes effective, and any Existing Notes to which such transferee is entitled will be cancelled on the Scheme Effective Date in accordance with the terms of the Scheme.

 

13Provision of information

 

13.1To the extent permitted by law (including any pre-existing obligations of confidentiality) DGL1 Scheme Creditors (including any DTC Participants and Intermediaries) shall provide the Information Agent with all information requested by it in writing.

 

14The Information Agent

 

The Information Agent shall not be liable for any claim or Liability arising in respect of the performance of its duties as Information Agent under the Scheme except where such claim or Liability arises as a result of its own fraud, gross negligence or willful misconduct.

 

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PART D
CONDITIONS TO THE SCHEME

 

15Conditions to the Effectiveness of the Scheme

 

15.1The Scheme shall only become effective following the satisfaction of all of the following conditions:

 

(a)the approval of the Scheme (with or without modifications, subject to Clause 19 of this Scheme) at the Scheme Meeting by a simple majority in number of the DGL1 Scheme Creditors entitled to vote at the Scheme Meeting either in person or by proxy representing at least three fourths in value of the Scheme Claims;

 

(b)the sanction of the Scheme (with or without modifications, subject to Clause 19 of this Scheme) by the Court;

 

(c)the receipt by the Company of the Section 101 Order or the Sale Documents becoming effective in accordance with their terms, as the case may be;

 

(d)entry of an order by the US Bankruptcy Court pursuant to Chapter 15 of the US Bankruptcy Code, recognizing and enforcing the Scheme;

 

(e)completion of the Founder Equity Contribution;

 

(f)payment in full, in cash of the then liquidated Existing Notes Trustee’s Fees and Expenses that have been invoiced to the Company no less than two (2) Business Days prior to the Scheme Effective Date;

 

(g)payment of all outstanding or otherwise applicable fees of Advisors to the Ad Hoc Group; and

 

(h)the delivery of an office copy of the Sanction Order to the Registrar of Companies for registration.

 

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PART E
general scheme provisions

 

16Termination of the Scheme

 

16.1If the Scheme Effective Date does not occur on or before the Longstop Time, the terms of and the obligations on the parties under or pursuant to this Scheme shall lapse and all of the compromises and arrangements provided by this Scheme and any releases granted pursuant to this Scheme shall be of no effect and shall be construed as if it had never become effective, and the rights and obligations of the DGL1 Scheme Creditors shall not be affected and shall be reinstated and remain in full force and effect.

 

17Securities Law Considerations

 

17.1The New DGL0.5 Secured Notes will not be registered under the US Securities Act or any state or other securities laws of the United States of America or any other jurisdiction.

 

17.2In sanctioning this Scheme, the Court has been apprised of the fact that the Company and DGL0.5 will rely on the Court’s approval of this Scheme as the basis for the Section 3(a)(10) exemption under the US Securities Act for the offer, issuance and distribution of DGL1 Scheme Consideration to DGL1 Scheme Creditors in exchange for their Scheme Claims.

 

18Scheme Costs

 

18.1The Company shall pay all Scheme Costs and any other costs incurred by the Company including in connection with the negotiation, preparation and implementation of the Scheme as and when they arise, including the costs of holding the Scheme Meeting, the costs of any petition to the Court to sanction the Scheme and the costs, charges, expenses and disbursements of all Advisors in the amounts agreed with the Company and the Existing Notes Trustee, which Scheme Costs shall not be subject to the arrangement and compromises to be effected by the Scheme.

 

19Modifications of the Scheme

 

19.1The Company may subject to the terms of the Lockup and Support Agreement, at any hearing to sanction the Scheme, consent on behalf of all DGL1 Scheme Creditors to any modification of the Scheme or any terms or conditions which the Court may think fit to approve or impose and which would not directly or indirectly have a materially adverse effect on the interests of any DGL1 Scheme Creditor or the Existing Notes Trustee, or any of them, under the Scheme or any Restructuring Document.

 

20Notices

 

20.1Any notice or other written communication to be given under or in relation to the Scheme shall be given in writing and shall be deemed to have been duly given if it is delivered by hand or sent by Post, and by air mail where it is addressed to a different country from that in which it is posted, with a copy sent by electronic mail to:

 

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(a)in the case of the Company

 

Digicel Limited

Clarendon House

2 Church Street

Hamilton, HM 11

Bermuda

Attn: David Lomas (david.lomas@digicelgroup.com)

 

with a copy to (which shall not constitute notice):

 

Conyers Dill & Pearman Limited

Clarendon House

2 Church Street

Hamilton, HM 11

Bermuda

Attn: Edward Rance

Email: edward.rance@conyers.com

 

-and-

 

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, NY 10017

Attn:     Michael Kaplan

Timothy Graulich

Gene Goldmintz

Email:      michael.kaplan@davispolk.com

timothy.graulich@davispolk.com

gene.goldmintz@davispolk.com

 

(b)in the case of a DGL1 Scheme Creditor, its last known address known to the Company, provided that all deliveries of notices required to be made by the Scheme shall be effective by posting the same in pre-paid envelopes addressed to the DGL1 Scheme Creditors or, if so directed by the DGL1 Scheme Creditors, to the relevant DTC Participant for the persons respectively entitled thereto at the addresses appearing in the records of DTC or to such other addresses (if any) as such persons may respectively direct in writing; or

 

(c)In the case of the Existing Notes Trustee and New Notes Trustee:

 

Deutsche Bank Trust Company Americas

Global Transaction Banking

Trust and Agency Services

60 Wall Street

24th Floor / Mail Stop NYC60-2405

New York, NY 10005

Attn: Rodney Gaughan, Brendan Meyer and Luke Russell

Email: rodney.gaughan@db.com, brendan.meyer@db.com

and luke-s.russell@db.com

 

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With a copy to: (which shall not constitute notice):

 

Moses & Singer LLP

405 Lexington Avenue

New York, NY

Attn: Alan E. Gamza, Andrew Oliver and Kent C. Kolbig

Direct Dial: (212) 554-7800

Fax (212) 554-7700

Email: agamza@mosessigner.com. aoliver@mosessinger.com

and kkolbig@mosessinger.com

 

(d)in the case of any other person, any address set forth for that person in any agreement entered into in connection with the Scheme.

 

20.2In addition, any notice or other written communication under or in relation to the Scheme to be given to the DGL1 Scheme Creditors shall be deemed to have been duly given if sent by electronic means through DTC.

 

20.3Any notice or other written communication to be given under the Scheme shall be deemed to have been served:

 

(a)if delivered by hand, on the first Business Day following delivery;

 

(b)if sent by Post, on the second Business Day after posting if the recipient is in the country of dispatch, otherwise on the fifth Business Day after posting; and

 

(c)if distributed electronically through DTC, on the fifth Business Day after such distribution.

 

20.4In proving service, it shall be sufficient proof, in the case of a notice sent by Post, that the envelope was properly stamped, addressed and placed in the Post.

 

20.5The accidental omission to send any notice, written communication or other document in accordance with this Clause 20 or the non-receipt of any such notice by any DGL1 Scheme Creditor, shall not affect any of the provisions of the Scheme or the effectiveness thereof.

 

21Conflict and Inconsistency

 

In the case of a conflict or inconsistency between the terms of the Scheme and the terms of the Explanatory Statement, the terms of the Scheme will prevail.

 

22Governing Law and Jurisdiction

 

Without prejudice to the choice of law provisions in the Existing Notes Indenture with respect to the rights and obligations of the Existing Notes Trustee thereunder, the Scheme shall be governed by, and construed in accordance with, the laws of Bermuda. The Company, DGL0.5, the Existing Notes Trustee, the Information Agent and each of the DGL1 Scheme Creditors agree that, to the fullest extent permitted by applicable law, any dispute between them shall be determined by the Court.

 

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APPENDIX 1

DEFINITIONS AND INTERPRETATION

 

Accredited Investors means institutional “accredited investors” as defined in 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act

 

Additional DIFL Secured Notes means the additional 8.75% senior secured notes due 2024 issued by Digicel Holdings (Bermuda) Limited and DIFL under the indenture dated March 15, 2019 among Digicel Holdings (Bermuda) Limited and DIFL, as issuers, certain guarantors party thereto and Deutsche Bank Trust Company Americas as trustee.

 

Ad Hoc Group means that certain ad hoc group of DGL1 Noteholders party to and as defined in the Lockup and Support Agreement.

 

Advisors means collectively, ASW, Conyers, Davis Polk, DC Advisory, KPMG IE, PJT, Weil, and the Information Agent.

 

Affiliate means:

 

(a)a company that directly or indirectly owns, controls, or holds with power to vote, 50 percent or more of the outstanding voting securities of the other company, other than an entity that holds such securities:

 

(i)in a fiduciary or agency capacity without sole discretionary power to vote such securities; or

 

(ii)solely to secure a debt, if such entity has not in fact exercised such power to vote;

 

(b)a company 50 percent or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by another company, or by an entity that directly or indirectly owns, controls, or holds with power to vote, 50 percent or more of the outstanding voting securities of the other company, other than an entity that holds such securities—

 

(i)in a fiduciary or agency capacity without sole discretionary power to vote such securities; or

 

(ii)solely to secure a debt, if such entity has not in fact exercised such power to vote;

 

(c)a person whose business is operated under a lease or operating agreement by the other company, or person substantially all of whose property is operated under an operating agreement with the other company; or

 

(d)an entity that operates the business or substantially all of the property of the other company under a lease or operating agreement.

 

Agent Master Ballot means the Master Ballot completed by the Information Agent (and not included in the Instruction Packet), acting on behalf of those DGL1 Noteholders who have appointed the Information Agent as their lawful agent and attorney-in-fact through the Tender Offer as evidenced by the receipt of the Information Agent of VOIs on behalf of those DGL1 Noteholders.

 

Asset Transfer means the transfer by the Company to DGL0.5 of substantially all of its assets and liabilities as shown in the Balance Sheet (but excluding for the purposes of this definition the Existing Notes) including, without limitation, all of the Company’s intra-Group receivables and payables, all of the Company’s equity interests in its subsidiaries, all of the Company’s cash and, to the extent permitted without consent or to the extent consent is received from the relevant third party, all of the Company’s trade and other payables, each of the foregoing

 

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occurring either pursuant to the Section 101 Order or the Sale Documents, but in all cases excluding any Third Party Liabilities.

 

ASW means ASW Law Limited.

 

ATOP Procedures means the procedures implemented by DTC to allow for voting in the Tender Offer as further described in the Tender Offer Memorandum in the section entitled “Tender Procedures”.

 

Balance Sheet means the unaudited balance sheet of the Company as of March 2020, as appended to the Explanatory Statement and subject to the qualifications set out in Appendix 6.

 

Ballot means either a Master Ballot or Beneficial Holder Ballot (as the case may be) but does not include the Agent Master Ballot.

 

Beneficial Holder Ballot means the form of beneficial holder ballot included in Appendix 2 (Instruction Packet) to the Explanatory Statement.

 

Beneficial Interest means an interest (whether or not it is the ultimate economic interest) in the principal amount outstanding of the Existing Notes, which interest is held (directly or indirectly) in book-entry form through DTC, a DTC Participant and/or another Intermediary.

 

Bermuda Companies Act means the Companies Act 1981 of Bermuda, as amended.

 

Bermuda Court means the Supreme Court of Bermuda.

 

Bermuda Registrar of Companies means the Registrar of Companies appointed under section 3 of the Companies Act.

 

Board means the board of directors of the Company.

 

Business Day means any day on which banks are open for business generally in Bermuda, London and New York.

 

Claim means all and any actions, causes of action, claims, counterclaims, suits, debts, sums of money, accounts, contracts, agreements, promises, damages, judgments, executions, demands, remedies or rights whatsoever or howsoever arising, whether present, future, prospective (including after the Scheme Effective Date) or contingent, known or unknown, whether or not for a fixed or unliquidated amount, whether or not involving the payment of money or the performance of an act or obligation or any failure to perform any obligation or any omission, whether assertable directly or derivatively, whether arising at common law, contract, tort, in equity or by statute in or under the laws of New York or Bermuda, or under any other law or in any other jurisdiction howsoever arising, other than Excluded Claims and “Claims” shall be construed accordingly.

 

Chapter 15 Filing means a petition for recognition of the Scheme under Chapter 15 of the U.S. Bankruptcy Code.

 

Company or DGL1 means Digicel Group One Limited, an exempted company incorporated under the laws of Bermuda with registration number 53897.

 

Company Payable means the Liability of the Company to DGL0.5 arising due to DGL0.5’s holding of the Beneficial Interest in the Existing Notes following the transfer of the Existing Notes by DGL1 Scheme Creditors to DGL0.5 pursuant to the Transfer Mechanics.

 

Condition Precedent means each condition precedent listed as such in the DGL1 Scheme, the satisfaction of which is a condition to the occurrence of the Scheme Effective Date.

 

Company Receivable means the receivable in favour of the Company owed by DGL0.5 arising due to the Asset Transfer.

 

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Conyers means Conyers Dill & Pearman Limited.

 

Consent Solicitation means the solicitation of consents from holders of the Existing Notes, pursuant to the Tender Offer for such Existing Notes, for certain amendments to Existing Notes Indenture to permit the Restructuring, as further described in the section of the Tender Offer Memorandum entitled “Description of the Tender Offers, Solicitation and Schemes”.

 

Convening Hearing means the hearing at which the directions regarding the convening of the Scheme Meeting were given.

 

Davis Polk means Davis Polk & Wardwell LLP.

 

DGL0.5 means Digicel Group 0.5 Limited, an exempted company incorporated under the laws of Bermuda with registration number 55491.

 

DGL0.5 Receivable means the balance owing by the Company to DGL0.5 following the set-off of the Company Payable against the Company Receivable as described in Step 2 of the Transfer Mechanics.

 

DGL1 Noteholders means a person who has a Beneficial Interest in the Existing Notes and who is the owner of the ultimate economic interest in any of the Existing Notes, and who has the right, upon satisfaction of certain conditions, to be issued definitive certificates in accordance with the terms of the Existing Notes Indenture.

 

DGL1 Scheme means the scheme of arrangement between the Company and the DGL1 Scheme Creditors proposed pursuant to section 99 of the Bermuda Companies Act, in substantially the same form set out in Section F of the Explanatory Statement.

 

DGL1 Scheme Consideration means for each $1,000 in principal amount of Existing Notes, $941 in principal amount of New DGL0.5 Secured Notes.

 

DGL1 Scheme Creditors means DGL1 Noteholders and (without double counting in each case), the Existing Depository Nominee and the Existing Notes Trustee.

 

DGL2 means Digicel Group Two Limited an exempted company incorporated under the laws of Bermuda with registration number 29364.

 

DGL2 Noteholders means Noteholders of the Existing DGL2 Notes.

 

DHCAL means Digicel Central America Holdings Limited.

 

Distribution Date means the date, following the Scheme Effective Date, on which DGL1 Scheme Consideration is distributed to DGL1 Scheme Creditors in accordance with the terms of the Scheme.

 

DL means Digicel Limited an exempted company incorporated under the laws of Bermuda with registration number 53898.

 

DL Noteholders means Noteholders of the Existing DL Notes.

 

DTC means The Depository Trust Company.

 

DTC Participant means the person recorded directly in the records of DTC as holding a Beneficial Interest in any Existing Notes in an account held with DTC, either for that person’s own account or on behalf of another person.

 

EEA means the European Economic Area.

 

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Eligible Holders means “qualified institutional buyers” within the meaning of Rule 144A (“Rule 144A”) under the Securities Act or (ii) persons outside of the United States that are not “U.S. persons” within the meaning of Regulation S under the Securities Act (“Regulation S”) and that are not acquiring any notes issued pursuant to the Tender Offers for the account or benefit of a U.S. person.

 

Exchange Notes means the Existing Notes, the Existing DGL2 Notes and the Existing DL Notes.

 

Excluded Claims means (i) Scheme Costs; (ii) Claims under or in connection with DGL1 Scheme Consideration; (iii) Claims in respect of rights created under the Scheme and/or which arise as a result of a failure by DGL1 or any party to the Scheme to comply with any terms of the Scheme from and after the Scheme Effective Date; and (iv) any Claims arising from or relating to fraud or dishonesty.

 

Existing Depository Nominee means Cede & Co as the entity in whose name the Existing Notes are registered and who acts as the depository and nominee for DTC with respect to the Existing Notes.

 

Existing DGL2 Notes means the Existing DGL2 2022 Notes and the Existing DGL2 2024 Notes.

 

Existing DGL2 2022 Notes means $937.1 million in aggregate principal amount of 8.250% Senior Notes due 2022 issued by DGL2.

 

Existing DGL2 2024 Notes means $993.0 million in aggregate principal amount of 9.125% Senior Cash Pay/PIK Notes due 2024 issued by DGL2.

 

Existing DL Notes means the Existing DL 2021 Notes and the Existing DL 2023 Notes.

 

Existing DL 2021 Notes means the $1.3 billion in aggregate principal amount of 6.00% Notes due 2021 issued by DL.

 

Existing DL 2023 Notes means the $925.0 million in aggregate principal amount of 6.75% Notes due 2023 issued by DL.

 

Existing Global Note Certificates means the global notes certificates representing the Existing Notes registered in the name of the Existing Depository Nominee.

 

Existing Notes means the 8.250% Senior Notes due 2022 issued by DGL1 pursuant to the Existing Notes Indenture.

 

Existing Notes Indenture means the indenture dated January 14, 2019, between DGL1 and Deutsche Bank Trust Company Americas, as trustee, pursuant to which the Existing Notes were constituted and issued.

 

Existing Notes Trustee means Deutsche Bank Trust Company Americas in its capacity as indenture trustee, and in each other capacity for which it serves, under or in connection with the Existing Notes Indenture; provided that if the context requires only certain of the foregoing capacities, then only in such capacit(ies).

 

Existing Notes Trustee’s Fees and Expenses means the reasonable and documented compensation, fees, expenses, disbursements and indemnity claims, including without limitation, attorneys’ fees, expenses and disbursements, incurred by the Existing Notes Trustee in any and all capacities to the extent payable or reimbursable under the Existing Notes Indenture or related documents.

 

Explanatory Statement means this document along with all annexes and exhibits.

 

Financial Promotion Order means Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 of the UK, as amended.

 

Foreign Representatives means the Provisional Liquidators.

 

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Founder Equity Contribution means a commitment by Denis O’Brien to cause Digicel Investments Limited, an entity controlled by him, to contribute $50.0 million in aggregate consideration comprised of $25.0 million in cash and the entirety of Onnut Ventures Limited’s ordinary share capital; and shareholder loans in exchange for 50 million common shares issued by DGL0.5, in the event that the Scheme is consummated.

 

FSMA means Financial Services and Markets Act 2000 of the UK, as amended.

 

Global Notes means the certificates representing the New DGL0.5 Secured Notes

 

Group means Digicel Group Limited and its subsidiaries.

 

Information Agent means Epiq Corporate Restructuring LLC.

 

Intermediary means a person who is not a DGL1 Noteholder but who holds a Beneficial Interest in the Existing Notes on behalf of another person or persons.

 

Instruction Packet means the Explanatory Statement, the form of Master Ballot, the form of Beneficial Holder Ballot and the Notice of the Scheme Meeting.

 

Instructions has the meaning given to that term in the Tender Offer Memorandum and includes, for the avoidance of doubt, the instruction appointing the Information Agent as lawful agent and attorney-in-fact for the purposes of appointing a proxy and submitting a vote in the Scheme.

 

KPMG IE means KPMG, an Irish partnership.

 

KPMG Liquidation Analysis Report means the report prepared by KPMG IE.

 

Latest Practicable Date means March 31, 2020.

 

Liability or Liabilities means any debt, liability or obligation of a person whether it is present, future, prospective, actual or contingent, whether it is fixed or undetermined, whether incurred solely or jointly or as principal or surety or in any other capacity, whether or not it involves the payment of money or performance of an act or obligation and whether it arises at common law, in equity or by statute, in Bermuda or any other jurisdiction, or in any manner whatsoever.

 

Lockup and Support Agreement means that certain lockup and support agreement dated as of April 1, 2020, between, inter alia, members of the Ad Hoc Group and the Company.

 

Longstop Time means September 1, 2020 at 5:00 pm (New York Time) or such later date and time agreed in writing by the Company and the Ad Hoc Group.

 

Master Ballot means the form of master ballot included in Appendix 2 (Instruction Packet) to the Explanatory Statement.

 

MiFID II means Directive 2014/65/EU of the European Union.

 

Minimum Participation Condition means the acceptances by more than 50% by value the relevant Noteholders in the relevant Tender Offer of the Tender Offer.

 

New DGL0.5 Indenture means the indenture to be entered into between DGL0.5 Limited and the New Notes Trustee pursuant to which the New DGL0.5 Secured Notes will be issued on terms substantially consistent with the description of notes contained in the Tender Offer Memorandum appended to the Explanatory Statement.

 

New DGL0.5 Secured Notes means the new DGL0.5 senior secured notes, which will be issued by DGL0.5 pursuant to the New DGL0.5 Indenture and will mature on April 1, 2024. Each New DGL0.5 Secured Notes will

 

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bear 8.0% cash interest per annum, payable semi-annually in arrears on each April 1 and October 1, beginning on the first date after the Settlement Date (as defined in the Tender Offer Memorandum). Cash interest will accrue from March 30, 2020. In addition, interest in addition to the cash interest shall be paid by issuing additional new DGL0.5 senior secured notes (rounded up to the nearest US$1.00) (“PIK Interest”). PIK Interest on the new DGL0.5 senior secured notes will accrue at a rate of 2.0% per annum from March 30, 2020. DGL0.5 may, at its option, pay 10.0% PIK Interest with no cash interest on the first two interest payments following the Settlement Date, as described in the description of notes of the Tender Offer Memorandum appended to the Explanatory Statement.

 

New DGL0.5 Secured Notes Collateral means the first-priority liens on (i) all share capital (including warrants to acquire shares) of Digicel Pacific Limited, (ii) all share capital (including warrants to acquire shares) of Digicel Limited, (iii) DGL0.5’s receivable under the Digicel (Central America) Group Limited Credit Facility and (iv) all share capital of Digicel (PNG) Limited owned by Digicel Pacific Limited.

 

New DGL0.5 Unsecured Notes means the new senior unsecured notes due 2025 to be issued by DGL0.5.

 

New Notes Trustee means Deutsche Bank Trust Company Americas as trustee for the New DGL0.5 Secured Notes.

 

Noteholder means the beneficial owner of and/or the person with the ultimate economic interest of any notes, whose interest in the relevant notes is held through and shown on records maintained in book entry form by DTC. A DTC Participant may also be a Noteholder.

 

Perpetual Convertible Notes means up to an aggregate principal amount of $50 million of newly issued 7.00% PIK Perpetual Convertible Notes to be issued by DGL0.5 pursuant to the Tender Offer promulgated by DGL2.

 

Personnel means, in relation to any person, its current and former officers, directors, managers, principals, members, employees, agents, advisory board members, financial advisors, partners, attorneys, accountants, investment bankers, consultants, representatives, and other professionals.

 

PJT means PJT Partners.

 

Pledge Agreement means that certain pledge agreement dated as of January 14, 2019, between the Company and the Existing Notes Trustee, pursuant to which the Company pledged its interest in, amongst other things, its shares in Digicel Pacific Limited and warrants in Digicel Holdings (Central America) Limited and its interests as creditor in the credit agreement originally dated as of December 22, 2008 (as amended and restated from time to time) between the Company and Digicel (Central America) Group Limited.

 

Practice Statement Letter means the letter dated April 28, 2020 sent to DGL1 Scheme Creditors by the Company in compliance with the Bermuda Court’s practice direction of October 9, 2007 in respect of schemes of arrangement under the Bermuda Companies Act.

 

PRIIPs Regulation means Regulation (EU) No 1286/2014 of the European Union.

 

Proceeding means any process, action, legal or other proceeding including any arbitration, mediation, alternative dispute resolution, judicial review, adjudication, demand, execution, distraint, forfeiture, re-entry, seizure, lien, enforcement of judgment or enforcement of any security or other right.

 

Pro-Forma Balance Sheet means the pro-forma unaudited balance sheet for DGL0.5 illustrating the Asset Transfer, as appended to the Explanatory Statement and subject to the qualifications set out in Appendix 6.

 

Proposed Amendments means certain amendments to the Existing Notes Indenture which include eliminating certain of the covenants, restrictive provisions, events of default, collateral and security as further described in the Tender Offer Memorandum under the section entitled “The Proposed Amendments and Waiver Solicitations.”

 

Prospectus Regulation means Regulation (EU) 2017/1129 of the European Union

 

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Provisional Liquidators means Michael Morrison and Charles Thresh of KPMG Advisory Limited and James Bennett of KPMG LLP, acting as joint provisional liquidators of the Company for the purposes of restructuring, appointed pursuant to an order of the Bermuda Court dated April 29, 2020.

 

Record Date means close of business on May 13, 2020 (New York Time).

 

Released Claim means any past, present and/or future Claim arising out of, relating to or in respect of: (i) the Existing Notes Indenture, (ii) the Existing Notes; (iii) the Scheme Claims and any of the facts and matters giving rise to the Scheme Claims; (iv) the Transfer Mechanics and Sale Documents (but excluding for the purposes of (iv) of this definition any Claims held by DGL0.5); and/or (v) all actions and/or decisions taken by any Released Person prior to the Scheme Effective Date in connection with the management and/or business of the Company, (but excluding any action and/or decision taken in connection with the management and/or business of any Affiliate of the Company) the preparation, negotiation, sanction or implementation of the Scheme, the Restructuring Documents and the Restructuring, and the execution and the carrying out of the steps and transactions contemplated therein in accordance with their terms, other than in each case, Excluded Claims.

 

Released Person means (i) the Company, (ii) the Existing Notes Trustee, (iii) the members of the Ad Hoc Group; (iv) the Provisional Liquidators, (v) with respect to each of the foregoing entities in clauses (i) through (iii), its Affiliates and Advisors, and with respect to each of the foregoing entities in clauses (i), (ii), (iii) and (v), each of their Personnel.

 

Restructured Group means DGL0.5 and its subsidiaries and Affiliates (but excluding Digicel Group Two Limited and Digicel Group Limited) following the consummation of the transactions contemplated by the Scheme and the Restructuring.

 

Restructuring means the restructuring of the Group’s debt and the recapitalisation of the Company as contemplated by the exchanges of the Existing DGL2 Notes and the Existing DL Notes pursuant to the respective Tender Offers for those securities (and any related scheme arrangement to implement such exchanges at a participation rate of 100%) and the Scheme.

 

Restructuring Documents means the New DGL0.5 Secured Notes, all security documents required to give effect to the New DGL0.5 Secured Notes Collateral, the New DGL0.5 Indenture, the Sale Documents (only to the extent the Section 101 Order is not received) and any other ancillary documents reasonably required to effectuate the terms of the Scheme.

 

Sale Documents means (i) the Omnibus Asset Transfer and Contribution Agreement between the Company and DGL0.5; (ii) the Repayment and Waiver Agreement between the Company and DGL0.5; (iii) Assignment of Warrants Agreement in respect of the Company’s warrants in Digicel Holdings Central America Limited delivered by the Company in favour of DGL0.5; (iv) an amendment and restated agreement in respect of the loan agreement between the Company and Digicel (Central America) Group Limited; and (v) any and all contracts, notices, resolutions or certificates to be executed by the Company to transfer all of the Company’s assets and Liabilities to DGL0.5.

 

Sanction Order means the order of the Court sanctioning the Scheme (with or without modification).

 

Scheme Claim means any Claim of a DGL1 Scheme Creditor against the Company arising directly or indirectly out of, in relation to and/or in connection with the Existing Notes, the Pledge Agreement and/or the Existing Notes Indenture, whether before, at or after the Record Date (provided that for voting purposes Scheme Claims shall be determined by reference to the principal amount of Existing Notes excluding any accrued interest or other amounts due pursuant to the Existing Notes or the Existing Notes Indenture), other than, in each case, Excluded Claims.

 

Scheme Condition means the requirement in each of the Tender Offers to obtain acceptances form 75% of offerees by value.

 

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Scheme Costs means the Liability of the Company in respect of the fees, costs and expenses of the Advisors and the Existing Notes Trustee’s Fees and Expenses, which Liabilities are not subject to the arrangements and compromises to be effected by the Scheme.

 

Scheme Creditor Parties means, in respect of a DGL1 Scheme Creditor, each of its predecessors, successors, assigns, transferees, Affiliates and Personnel, in each case other than DGL0.5.

 

Scheme Effective Date means the date on which all Conditions Precedents have been satisfied.

 

Scheme Meeting means the meeting of the DGL1 Scheme Creditors to vote on the Scheme convened pursuant to an order of the Bermuda Court including any adjournments thereof.

 

Scheme Sanction Hearing means the hearing of the application by the Company for the sanctioning of the Scheme by the Bermuda Court.

 

Scheme Website means https://dm.epiq11.com/Digicel

 

SEC means the US Securities and Exchange Commission.

 

Section 101 Order means an order by the Bermuda Court pursuant to section 101 of the Companies Act (whether forming part of the Sanction Order or otherwise) pursuant to which the Asset Transfer shall occur.

 

Securities Act means U.S. Securities Act of 1933, as amended from time to time.

 

Tender Agent means Epiq Corporate Restructuring LLC.

 

Tender Offer Materials means all documentation and other materials accompanying a Tender Offer (whether transmitted electronically or in hard copy) including, without limitation, the relevant Tender Offer Memorandum, an eligibility letter and letter of transmittal.

 

Tender Offer Memorandum means the tender offer memorandum dated April 1, 2020 issued by the Company and DGL2 in connection with each of their respective Tender Offers.

 

Tender Offers means (i) the offer by the DGL0.5 to purchase any and all of the Existing Notes; (ii) the offer by DGL0.5 to purchase any and all of the Existing DGL2 Notes; (iii) the offer by DL to purchase any and all of the Existing DL Notes, in each case as set out (and in for the consideration described in), in the case of (i) and (ii) the Tender Offer Memorandum and in the case of (iii) as set out in the tender offer memorandum dated April 1, 2020 issued by DL; and “Tender Offer” means any one of the forgoing as the context admits.

 

Third Party Liabilities means any existing, identified and non-contingent liabilities of DGL1 as of the Scheme Effective Date that are not transferred pursuant to the Transfer Mechanics.

 

Transfer Mechanics means the steps described in Clause 7.1 of the Scheme.

 

UK means the United Kingdom.

 

U.S. Bankruptcy Code means title 11 of the Code of Laws of the United States of America.

 

U.S. Bankruptcy Court means the United States Bankruptcy Court for the Southern District of New York.

 

U.S. Bankruptcy Rules means the U.S. Federal Rules of Bankruptcy Procedure.

 

VOI means voluntary offer instruction number(s) listed on a nominee instruction form to submit Instructions to the Information Agent pursuant to the Tender Offer conducted by the Company.

 

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Voting Instruction Deadline means 5:00 p.m. (New York Time) on May 28, 2020.

 

Weil means Weil, Gotshal & Manges LLP.

 

In this Explanatory Statement, unless the context otherwise requires or otherwise expressly provides:

 

(a)references to a “person” include references to an individual partnership, company, corporation, other legal entity, unincorporated body of persons or any state or state agency;

 

(b)references to a statute or a statutory provision include the same as subsequently modified, amended or re-enacted from time to time;

 

(c)references to an agreement, deed or document shall be deemed also to refer to such agreement, deed or document as amended, supplemented, restated, verified, replaced and/or novated (in whole or in part) from time to time and to any agreement, deed or document executed pursuant thereto;

 

(d)the singular includes the plural and vice versa and words importing one gender shall include all genders;

 

(e)references to “$” are references to the lawful currency of the United States of America;

 

(f)the words “include” and “including” are to be construed without limitation, general words introduced by the word “other” are not to be given a restrictive meaning by reason of the fact that they are preceded by words indicating a particular class of acts, matters or things and general words are not to be given a restrictive meaning by reason of the fact that they are followed by particular examples intended to be embraced by the general words;

 

(g)a company is a “subsidiary” of another company, its “holding company”, if that other company: (a) holds a majority of the voting rights in it; (b) is a member of it and has the right to appoint or remove a majority of its board of directors; or (c) is a member of it and controls alone, pursuant to an agreement with other members, a majority of the voting rights in it, or, if it is a subsidiary of a company that is itself a subsidiary of that other company; and

 

(h)an “undertaking” means a body corporate or partnership; or an unincorporated association carrying on a trade or business, with our without a view to profit; and an undertaking is a parent undertaking in relation to another undertaking, a “subsidiary undertaking”, if: (a) it holds the majority of voting rights in the undertaking; (b) it is a member of the undertaking and has the right to appoint or remove a majority of its board of directors; (c) it has the right to exercise a dominant influence over the undertaking: (i) by virtue of provisions contained in the undertaking's articles; or (ii) by virtue of a control contract; or (d) it is a member of the undertaking and controls alone, pursuant to an agreement with other shareholders or members, a majority of the voting rights in the undertaking.

 

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APPENDIX 2

BALLOT PACKAGE

 

The Company is soliciting votes from the DGL1 Scheme Creditors in respect of the Scheme. This Ballot Package comprises:

 

1.A “Master Ballot” (which includes a section for the appointment of a proxy) for use by the bank, broker, or other financial institution holding the Existing Notes “in street name” as record holder at DTC to convey and certify the beneficial holder’s vote; and

 

2.A “Beneficial Holder Ballot” (which includes a section for the appointment of a proxy).

 

The term “Ballot” is used interchangeably below to refer to a Beneficial Holder Ballot or a Master Ballot as the context requires.

 

THIS EXPLANATORY STATEMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

 

·Please read the Explanatory Statement and the Scheme, and follow the instructions contained herein before completing your Ballot. Unless otherwise defined herein, capitalised terms used but not defined in this Instruction Packet have the same meanings as in the Explanatory Statement.

 

·Please ensure that your Ballot is validly completed and submitted in accordance with the instructions set out therein, so that the relevant Master Ballot is submitted to the Information Agent by the Voting Instruction Deadline, being 5:00 p.m. (New York Time) on May 28, 2020.

 

·Please note that each DGL1 Scheme Creditor may only to submit the Instructions or one Ballot in respect of the Scheme. If you have already submitted Instructions via the Tender Offer, you should not submit a Ballot.

 

·The record date for all DGL1 Scheme Creditors is the Record Date, being close of business (New York City time) on May 13, 2020.

 

·If you have not submitted Instructions through the Tender Offer and you wish to vote in the Scheme you must complete the relevant Ballot. Instructions will not be accepted through ATOP after the Record Date.

 

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1.General guidance

 

1.1Introduction

 

(a)These instructions have been prepared to assist DGL1 Scheme Creditors in completing the relevant Ballot.

 

(b)Each of the Existing Notes Trustee and the Existing Depository Nominee has been directed by the Bermuda Court not to exercise any voting rights at the Scheme Meeting in respect of the Existing Notes.

 

(c)The Information Agent has been appointed by the Company to facilitate communications with DGL1 Scheme Creditors concerning the Scheme.

 

1.2Voting at the Scheme Meeting

 

(a)Before the Scheme can be sanctioned by the Bermuda to become effective and binding on the Company and the DGL1 Scheme Creditors, a majority in number, representing at least 75% of the aggregate value of the Scheme Claims1, of the DGL1 Scheme Creditors present and voting (whether in person or by proxy) at the following Scheme Meeting, must vote to approve the Scheme.

 

(b)A DGL1 Scheme Creditor as of the Record Date will be entitled to vote at the Scheme Meeting provided it has submitted either a validly completed Ballot in accordance with the instructions in this Ballot Package or if a DGL1 Scheme Creditor has delivered the Instructions prior to the Record Date.

 

(c)In respect of a DGL1 Scheme Creditor who has already submitted the Instructions as required by the terms of Tender Offer prior to the Record Date, no further action is required. DGL1 Noteholders who have validly submitted the Instructions have authorized the Tender Agent as their lawful agent and attorney-in-fact in respect of their Scheme Claims as DGL1 Scheme Creditors to take all necessary actions to vote in favour of the Scheme in accordance with the Instructions (because the Scheme is on substantially the same or better economic terms to the DGL1 Noteholders as those terms set forth in the Tender Offer Memorandum). In furtherance of this authorization, the Tender Agent will, on behalf of those Existing Notes it has received Instructions for, complete and execute the Agent Master Ballot appointing the Chairman of the Scheme Meeting as proxy for in respect of the Scheme Claims represented by such Existing Notes with authority to vote such Scheme Claims in favour of the Scheme.

 

(d)The Scheme Meeting shall be held at the 8:00 a.m. (New York Time) / 9:00 a.m. (Bermuda Time) via conference call using the following details: +1 917-933-2314 (US), +44 20 3787 4277 (UK), Conference ID: 569 450 771# on June 1, 2020.

 

(e)Formal notice of the Scheme Meeting is set out at Appendix 3 (Notice of Scheme Meeting) to this Explanatory Statement.

 

(f)The dates referred to in paragraph 1.2(d) above assume that the Scheme Meeting will not be adjourned or delayed.

 

1.3Process and Deadline for Voting at the Scheme Meeting

 

 

 

 

1 Which for the purposes of voting are determined by reference to the principal amount of the Existing Notes (excluding any accrued interest or other amounts due pursuant to the Existing Notes or the Existing Notes Indenture).

 

 

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(a)Voting on the Scheme will take place at the Scheme Meeting by DGL1 Scheme Creditors appearing in person, by a duly authorised representative or by proxy as explained in more detail in Section 2 (DGL1 Scheme Creditors) below.

 

(b)If Instructions have not already been delivered pursuant to the Tender Offer, then DGL1 Scheme Creditors must complete and submit Ballots to the Information Agent, by the Voting Instruction Deadline. If a DGL1 Noteholder has not already submitted Instructions and is not a DTC Participant, it must ensure that it submits its voting instructions, votes and elections to its DTC Participant (and any intermediary Intermediaries) sufficiently before the Voting Instruction Deadline to enable its DTC Participant to complete and submit the Ballot to the Information Agent by the Voting Instruction Deadline.

 

(c)The Company may amend this Ballot Package at any time before the Voting Instruction Deadline. The Company may also extend the Voting Instruction Deadline. DGL1 Scheme Creditors will receive notice of any such extension as promptly as practicable.

 

(d)Notwithstanding any other provision of the Explanatory Statement of which this Ballot Package forms part, the Chairman of the Scheme Meeting will be entitled to permit or reject, at his sole discretion, a person to vote at the Scheme Meeting in accordance with a validly completed and submitted Ballot that is submitted after the Voting Instruction Deadline.

 

(e)For the avoidance of doubt, each DGL1 Scheme Creditor as of the Record Date is, subject to the terms of the Scheme and in accordance with any order of the Bermuda Court, permitted to (i) attend and vote at the Scheme Meeting in person or by a duly authorised representative, if a corporation, (ii) (provided the DGL1 Scheme Creditor has submitted a Ballot rather than the Instructions) to appoint the Chairman as its proxy and to instruct the Chairman to cast a vote on behalf of such DGL1 Scheme Creditor and whether to instruct the Chairman to vote in accordance with the wishes of such DGL1 Scheme Creditor or (iii) (provided the DGL1 Scheme Creditor has submitted a Ballot rather than the Instructions) to appoint someone else as its proxy to attend and vote at the Scheme Meeting in person on its behalf and whether to instruct such proxy to cast a vote in accordance with the wishes of such DGL1 Scheme Creditor. Any DGL1 Scheme Creditor or its proxy attending the Scheme Meeting in person must provide: (i) a duplicate copy of the validly completed Ballot (in any) delivered on their behalf; (ii) evidence of their Beneficial Interest in the Existing Notes as of the Record Date with accompanying proof from the relevant DTC Participant; (iii) evidence of corporate authority (in the case of a corporation) (for example, a valid power of attorney and/or board minutes); and (iv) evidence of personal identity (a passport or other equivalent identification), in each case by email to DGL1@kpmg.bm no later than thirty minutes before the scheduled time of the Scheme Meeting for the purposes of registering their attendance at the Scheme Meeting.

 

1.4Assessment of Scheme Claims for Voting Purposes

 

(a)The amount of the Scheme Claims of each DGL1 Scheme Creditor who submits a valid Ballot or Instructions (as applicable), will be calculated for voting purposes as of the Record Date based on information confidentially provided to the Company by the Information Agent, which shall include any documents or information provided by each DGL1 Scheme Creditor in support of its Scheme Claims. This information will be used by the Chairman to determine whether each resolution is validly passed at the Scheme Meeting.

 

(b)Scheme Claims will be assessed as the principal amount of Existing Notes held by each DGL1 Scheme Creditor, excluding any accrued interest or other amounts due pursuant to the Existing Notes or the Existing Notes Indenture.

 

1.5Transfers / Assignments after the Record Date

 

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(a)Neither the Company nor the Information Agent shall recognise any sale, assignment or of any Scheme Claim after the Record Date for the purposes of determining entitlement to attend and vote at the Scheme Meeting.

 

(b)All distributions of DGL1 Scheme Consideration shall be made to DGL1 Scheme Creditors in accordance with the Scheme irrespective of any sale, assignment or of any Scheme Claim after the Record Date.

 

(c)A transferee of an economic, beneficial or proprietary interest in the Existing Notes after the Record Date will be bound by the terms of the Scheme in the event that it becomes effective, and any Existing Notes to which such transferee is entitled will be cancelled on the Scheme Effective Date in accordance with the terms of the Scheme.

 

2.DGL1 Scheme Creditors

 

2.1General

 

(a)Each DGL1 Scheme Creditor who is entitled to vote and has not submitted the Instructions and wishes to vote by Ballot must either

 

(i)validly complete and submit the relevant Ballot in accordance with these instructions and the instructions contained therein;

 

(ii)indicate its decision to either vote for or against each of the Scheme; and

 

(iii)sign and return the Ballot to the Information Agent in accordance with the instructions contained in this Instruction Packet and the relevant Ballot.

 

2.2Each DGL1 Scheme Creditor who is entitled to vote and that wishes to vote at the Scheme Meeting other than by attending in person will be required to do the following:

 

DGL1 Noteholders Not Holding Existing Notes in Their Name at DTC

 

(a)Return a signed and completed Beneficial Holder Ballot (with instructions for the Chairman to vote on the beneficial holder’s behalf at the Scheme Meeting) to the applicable Intermediary with sufficient time for the Intermediary (if it is not a DTC Participant) to forward the Beneficial Holder Ballot to its DTC Participant or (if the Intermediary is a DTC Participant) to incorporate the vote on a Master Ballot and to submit the Master Ballot to the Information Agent so that it is actually received by the Information Agent by 5:00 pm (New York Time) on May 28, 2020 (the “Voting Instruction Deadline”).

 

DGL1 Noteholders Holding Existing Notes in Their Name at DTC

 

(b)A DGL1 Noteholder who has not already validly tendered their Existing Notes in the Tender Offer and who is as a record holder in DTC in its own name should vote on the Scheme by completing and signing a Beneficial Holder Ballot and returning it directly to the Information Agent as described in the Beneficial Holder Ballot.

 

Intermediaries and DTC Participants

 

(c)An Intermediary that, on the Record Date, is the record holder of the Existing Notes for one or more DGL1 Noteholder can obtain the votes of the DGL1 Noteholders of such Existing Notes, consistent with customary practices for obtaining the votes of securities held in “street name,” by forwarding to the DGL1 Noteholders the unsigned Beneficial Holder Ballots, together with this Explanatory Statement. Each such DGL1 Noteholder must then indicate his, her, or its vote on the

 

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Beneficial Holder Ballot, complete the information requested on the Beneficial Holder Ballot, review the certifications contained on the Beneficial Holder Ballot, execute the Beneficial Holder Ballot, and return the Beneficial Holder Ballot to the Intermediary. After collecting the Beneficial Holder Ballots, the Intermediary should, either (i) if it is a DTC Participant, complete a Master Ballot compiling the votes and other information from the Beneficial Holder Ballots, execute the Master Ballot, and deliver the Master Ballot to the Information Agent so that it is ACTUALLY RECEIVED by the Information Agent on or before the Voting Instruction Deadline; or (ii) if it is not a DTC Participant, immediately forward all Beneficial Holder Ballots to its DTC Participant. All Beneficial Holder Ballots returned by DGL1 Noteholders should either be forwarded to the Information Agent (along with the Master Ballot) or retained by DTC Participants for inspection for at least one year from the Voting Instruction Deadline;

 

For the avoidance of doubt, Intermediaries are authorized to collect votes and proxies from their beneficial holder clients in accordance with their customary practices, including the use of a “voting instruction form” in lieu of (or in addition to) a Beneficial Holder Ballot, as well as collecting votes from DGL1 Noteholders through online voting, by phone, facsimile, or other electronic means.

 

EACH INTERMEDIARY SHOULD ADVISE ITS DGL1 NOTEHOLDERS TO RETURN THEIR BENEFICIAL HOLDER BALLOTS TO THE INTERMEDIARY BY A DATE CALCULATED BY THE INTERMEDIARY OR THE INTERMEDIARY’S DTC PARTICIPANT (AS THE CASE MAY BE) TO ALLOW IT TO PREPARE AND RETURN THE MASTER BALLOT TO THE INFORMATION AGENT SO THAT IT IS RECEIVED BY THE INFORMATION AGENT ON OR BEFORE THE VOTING INSTRUCTION DEADLINE.

 

Instructions for Voting by Proxy

 

(a)If you have already delivered Instructions pursuant to the Tender Offer, you may not vote by proxy using the Ballot. In addition if you have already delivered the Instructions but prior to the Record Date you acquire additional Existing Notes and wish to vote the Scheme Claims under the additional Existing Notes by Ballot, you will be required to disclose in your Ballot the amount of such Existing Notes you have delivered Instructions for and the relevant VOI in respect of such Existing Notes, so as to avoid double counting DGL1 Noteholders for numerosity purposes.

 

(b)Each Ballot contains a section for the appointment of a proxy. DGL1 Scheme Creditors should read the language on the Ballot pertaining to the appointment of a proxy carefully and follow the instructions contained therein if they wish to vote by proxy.

 

(c)Each DGL1 Scheme Creditor intending to vote by proxy must check the appropriate box on the Ballot appointing the Chairman as its proxy for the Scheme Meeting or, alternatively, nominate an individual other than the Chairman (as applicable) in accordance with the instructions included on the Ballot. The DGL1 Scheme Creditor is then required to submit the completed Ballot in accordance with the instructions provided so that the Ballot or Master Ballot (as applicable), including the proxy, is actually received by the Information Agent by no later than the Voting Instruction Deadline.

 

(d)The appointment of a proxy will not preclude a DGL1 Scheme Creditor entitled to vote from attending and voting in person at the Scheme Meeting should it so wish. In the event that a DGL1 Scheme Creditor votes in person at the Scheme Meeting, any returned Ballot with the vote and proxy included therein will be deemed to have been revoked for the Scheme Meeting. A DGL1 Scheme Creditor intending to vote in person must provide: (i) a duplicate copy of the validly completed Ballot (in any) delivered on their behalf; (ii) evidence of their Beneficial Interest in the Existing Notes as of the Record Date with accompanying proof from the relevant DTC Participant; (iii) evidence of corporate authority (in the case of a corporation) (for example, a valid power of attorney and/or board minutes); and (iv) evidence of personal identity (a passport or

 

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other equivalent identification), in each case by email to DGL1@kpmg.bm no later than thirty minutes before the scheduled time of the Scheme Meeting for the purposes of registering a DGL1 Noteholder’s attendance at the Scheme Meeting.

 

Even if you do not appoint a proxy and you do not attend and vote at the Scheme Meeting, you will still be bound by the outcome of the Scheme Meeting. You are therefore strongly encouraged to attend and vote at the Scheme Meeting in person or by proxy if you have not previously delivered the Instructions prior to the Record Date.

 

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Form of Master Ballot

 

IN THE SUPREME COURT OF BERMUDA

 

COMPANIES (WINDING UP)

 

2020: No.

 

IN THE MATTER OF DIGICEL GROUP ONE LIMITED

 

(IN PROVISIONAL LIQUIDATION)

 

AND

 

IN THE MATTER OF THE COMPANIES ACT 1981

 

$1,000,000,000 8.250% Senior Notes due 2022, issued by the Company

 

CUSIP/ISIN: 25382DAA4 / US25382DAA46;

 

G27634AA5 / USG27634AA56

 

(the “Existing Notes”)

 

MASTER BALLOT FOR DTC PARTICIPANTS OF

 

BENEFICIAL HOLDERS OF SCHEME CLAIMS

 

______________________________________________________________________________

 

PLEASE READ AND FOLLOW THE ENCLOSED INSTRUCTIONS FOR COMPLETING THIS MASTER BALLOT CAREFULLY BEFORE COMPLETING THIS MASTER BALLOT.

 

THIS MASTER BALLOT MUST BE COMPLETED, EXECUTED AND RETURNED SO THAT IT IS ACTUALLY RECEIVED BY EPIQ CORPORATE RESTRUCTURING LLC (THE “INFORMATION AGENT”) ON OR BEFORE 5:00 P.M. NEW YORK TIME ON MAY 28, 2020 (THE “VOTING INSTRUCTION DEADLINE”)

 

THIS MASTER BALLOT SHOULD ONLY BE COMPLETED WHERE THE DTC PARTICIPANT HAS NOT, EITHER ON THEIR OWN ACCOUNT OR ON BEHALF OF BENEFICIAL HOLDERS OF THE EXISTING NOTES DELIVERED INSTRUCTIONS VIA THE TENDER OFFER.

 

IF YOU HAVE PREVIOUSLY DELIVERED INSTRUCTIONS BUT HAVE SUBSEQUENTLY ACQUIRED EXISTING NOTES THAT YOU WISH TO VOTE USING THIS BALLOT, YOU ARE REQUIRED TO DISCLOSE YOUR VOI TO AVOID DOUBLE COUNTING FOR NUMEROSITY PURPOSES.

 

_____________________________________________________________________________________________

 

 

 

 

 

 

 

 

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Digicel Group One Limited, ( “DGL1” or the “Company) is soliciting votes with respect a scheme of arrangement (the “Scheme”) to be implemented under Bermuda law in parallel with a Tender Offer commenced by DGL1.

 

You have been provided with this Ballot as part of the Instruction Packet which contains an explanatory statement (“Explanatory Statement”) relating to the Scheme. Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Explanatory Statement. YOU ARE ENCOURAGED TO READ THE MATERIALS CONTAINED IN THE INSTRUCTION PACKAGE IN FULL. The Scheme, if implemented will materially affect the rights of holders of the Existing Notes.

 

This Master Ballot is being sent to you because the Company’s records indicate that, as of the Record Date (the close of business on May 13, 2020), you are a bank, brokerage firm, or the agent thereof (each, a “DTC Participant”) of one or more beneficial holders (collectively, the “DGL1 Noteholders”) or their Intermediaries of the Existing Notes.

 

As a DTC Participant, you are required to deliver an Instruction Packet, including a Beneficial Holder Ballot, to each DGL1 Noteholder for whom you hold Existing Notes that were not tendered in the Tender Offer as of the Record Date and take any action required to enable such DGL1 Noteholder to timely vote its Scheme Claim by appointing a proxy to vote on its behalf at the Scheme Meeting. If you are collecting proxy elections and votes through Beneficial Holder Ballots, you should include in each Instruction Packet a return envelope addressed to you or other means of submitting a Beneficial Holder Ballot to you. If you are collecting proxy elections and votes through a voter information forms (“VIF”), e-mail, or other customary means in lieu of a Beneficial Holder Ballot, you should include in each Instruction Packet clear instructions to your DGL1 Noteholder clients on how to submit their proxy election and vote. With respect to any proxy elections and votes returned to you, you must (1) execute this Master Ballot so as to reflect the instructions given to you as set forth in the Beneficial Holder Ballots by the DGL1 Noteholder (or their Intermediaries) for whom you hold Existing Notes and (2) forward this Master Ballot to the Information Agent in accordance with the instructions accompanying this Master Ballot.

 

If you have not tendered your Existing Notes pursuant to the Tender Offer and you are both the DGL1 Noteholder and DTC Participant for the same Existing Notes and you wish to vote such Existing Notes, you MUST complete a Master Ballot and return it to the Information Agent prior to the Voting Instruction Deadline.

 

Your rights are described in the Explanatory Statement, which includes the Scheme. If have any questions regarding any of the contents of the Instruction Package, you may contact the Information Agent by: (1) visiting the Scheme Website at https://dm.epiq11.com/Digicel; or (2) writing to the Company, c/o Epiq Corporate Restructuring LLC, at tabulation@epiqglobal.com or (3) by calling +1 (646) 282-2500 and asking to speak with a member of the Solicitation Group.

 

This Master Ballot may not be used for any purpose other than to submit DGL1 Noteholder appointments of proxies to cast votes to accept or reject the Scheme. If you believe you have received this Master Ballot in error, or if you believe that you have received the wrong Ballot, please contact the Information Agent immediately at the address, email address, or telephone numbers set forth above.

 

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If the Information Agent does not actually receive this Master Ballot on or before the
Voting Instruction Deadline, which is 5:00 p.m. New York Time on May 28, 2020, then the DGL1 Noteholders’ proxy elections and votes transmitted on such Master Ballot will NOT be counted, unless the relevant DGL1 Noteholder (or you as their DTC Participant) attend the Scheme Meeting in person.

  

Before completing this Master Ballot, please read and follow the enclosed “Instructions for Completing this Master Ballot” carefully to ensure that you complete, execute and return this Master Ballot properly.

 

Item 1.Certification of Authority to Vote.

 

The undersigned hereby certifies that, as of the Record Date (the close of business on May 13, 2020), that it has not previously delivered Instructions pursuant to the Tender Offer in respect of any Existing Notes via the Tender Offer and (please check the applicable box:

 

qis a DTC Participant for the DGL1 Noteholder (and their respective Intermediaries (if any)) of the aggregate principal amount of Existing Notes listed in Item 3 below and is the registered holder of the Scheme Claims represented by any such Existing Notes; or

 

qis acting under a power of attorney and/or agency agreement (a copy of which will be provided upon request) granted by a DTC Participant that is the registered holder of the aggregate principal amount of Existing Notes listed in Item 3 below; or

 

qhas been granted a proxy (an original of which is annexed hereto) from (1) a Intermediary or (2) a DGL1 Noteholder, that is the registered holder of the aggregate amount of the Existing Notes listed in Item 3 below;

 

and, accordingly, has full power and authority to appoint a proxy on behalf of the DGL1 Noteholders of the Scheme Claims described in Item 3 below to attend the Scheme Meeting and vote the relevant Scheme Claims in the manner indicated in this Master Ballot.

 

If you have previously delivered Instructions in respect of any Existing Notes via the Tender Offer but have subsequently acquired additional Existing Notes that have not yet been tendered by the Record Date, you will not be able to make the above certification. Please contact the Information Agent for further instructions.

 

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Item 2A.DGL1 Noteholders Who Appointed Chairman as Proxy.

 

For your DGL1 Noteholder clients that appointed the Chairman as their proxy in Item 2 of the Beneficial Holder Ballot, please indicate those beneficial holders’ votes on the Scheme.

 

Your Customer Account Number for Each Beneficial Holder of Scheme Claims 2Amount Voting to ACCEPT the Scheme Amount Voting to REJECT the Scheme
  $ $
  $ $
  $ $
  $ $
  $ $
  $ $
  $ $
  $ $
  $ $
  $ $

 

 

 

 

 

 

 

 

 

 

 

2 In each case, insert principal amount of Existing Notes

 

 

 

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Item 2B.DGL1 Noteholders Who Appointed Proxy Other Than the Chairman

 

For your DGL1 Noteholder clients that appointed someone other than the Chairman as their proxy in Item 2 of the Beneficial Holder Ballot, please certify below the account number of each applicable DGL1 Noteholder (or that of their Intermediaries), the name and contact information for the proxy appointed by the DGL1 Noteholder, and the DGL1 Noteholder’s vote on the Scheme. The undersigned certifies that the below DGL1 Noteholder who holds Scheme Claims or their Intermediaries (as identified by their respective customer account numbers) have delivered to the undersigned, as DTC Participant, Beneficial Holder Ballots on behalf of the DGL1 Noteholders or other customary and acceptable forms for conveying proxy elections and votes.

 

Please further note: (1) each account of a DGL1 Noteholder (or their Intermediary) must vote all such DGL1 Noteholder’s Scheme Claims to accept or reject the Scheme and may not split such vote; and (2) do not count any DGL1 Noteholder Ballot executed by the DGL1 Noteholder that does not indicate an acceptance or rejection of the Scheme or that indicates both an acceptance and a rejection of the Scheme.

 

If you need more than the five (5) rows below to record instances where your DGL1 Noteholder clients (or their Intermediaries) appointed someone other than the Chairman as their proxy, please make additional copies of the chart below.

 

 

Your Customer Account Number for Each Beneficial Holder (or their Intermediaries) of Scheme Claims Proxy Information 1Amount Voting to ACCEPT the Scheme Amount Voting to REJECT the Scheme Amount Voting on the Scheme at the DISCRETION
of the proxy
 

Name:____________________________________________

 

Street Address:_____________________________________

 

Street Address:_____________________________________

 

City, State, Zip:____________________________________

 

Country:__________________________________________

 

Tel. No.:__________________________________________

 

E-Mail Address:____________________________________

 

$ $ $

 

 

 

 

1 In each case, insert principal amount of Existing Notes

 

100 

 

Item 3.Certification as to Transcription of Information from Item 4 of the Beneficial Holder Ballots as to Scheme Claims Voted Through Other Beneficial Holder Ballots.

 

The undersigned certifies that it has transcribed in the following table the information, if any, provided by DGL1 Noteholder in Item 4 of each of the DGL1 Noteholder’s original Beneficial Holder Ballots, identifying any Scheme Claims for which such DGL1 Noteholder have submitted other Beneficial Holder Ballots other than to the undersigned:

 

 

 

Your Customer Account
Number for Each DGL1 Noteholder of Scheme Claims

TRANSCRIBE FROM ITEM 4 OF
THE Beneficial Holder BALLOTS:

 

Account Number or VOI Number2 Name of DTC Participant

3Amount of Other Scheme Claims

 

1.                          

$

 

2.                          

$

 

3.                          

$

 

4.                          

$

 

5.                          

$

 

6.                          

$

 

7.                          

$

 

 

 

 

101 

 

 

 

8.                          

$

 

9.                          

$

 

10.                       

$

 

       

 

 

 

 

 

2 If a VOI Number is included, then only Your Account Number and the VOI Number are needed in the particular row.

 

3 Insert principal amount of Existing Notes

 

 

 

102 

 

Item 4.Certification.

 

By signing this Master Ballot, the undersigned certifies to the Company that:

 

(a)it has received a copy of the Instruction Packet and has delivered the same to the DGL1 Noteholder listed on the Beneficial Holder Ballots;

 

(b)it has received a completed and signed Beneficial Holder Ballot (or otherwise accepted and customary form for the conveyance of a vote) from each DGL1 Noteholder listed in Item 3 of this Master Ballot;

 

(c)it is the DTC Participant of the Existing Notes being voted;

 

(d)it has been authorized by each such DGL1 Noteholder to appoint a proxy and direct the proxy to vote on the Scheme;

 

(e)it has properly disclosed:

 

(A)the number of DGL1 Noteholders who completed Beneficial Holder Ballots;

 

(B)the respective amounts of the Existing Notes owned, as the case may be, by each DGL1 Noteholder who completed a Beneficial Holder Ballot;

 

(C)each such DGL1 Noteholder’s respective proxy appointment and direction to vote concerning the Scheme;

 

(D)each such DGL1 Noteholder’s certification as to other Scheme Claims voted; and

 

(E)the customer account or other identification number for each such DGL1 Noteholder; and

 

(F)any Existing Note VOIs that it has received prior to the Record Date;

 

(f)each such DGL1 Noteholder has certified to the undersigned that it is eligible to vote on the Scheme and that it is a DGL1 Scheme Creditor and it has not otherwise submitted Instructions via the Tender Offer; and

 

(g)it will maintain Beneficial Holder Ballots and evidence of separate transactions returned by DGL1 Noteholder (whether properly completed or defective) for at least one year after the Scheme Effective Date and disclose all such information to the Company, if so ordered.

 

 

103 

 

 

 

Name of DTC Participant:  
  (Print or Type)
Participant Number:  
Name of Proxy Holder or Agent:  
  (Print or Type)
Social Security or Federal Tax Identification Number:  
Signature:  
Name of Signatory:  
  (If other than Intermediary)
Title:  
Address:  
   
   
Date Completed:  
   
             

 

 

PLEASE COMPLETE, SIGN, AND DATE THIS MASTER BALLOT AND RETURN IT PROMPTLY VIA EMAIL TO:

 

 

 

EPIQ Corporate Restructuring LLC

 

Email: tabulation@epiqglobal.com

Telephone:  +
1 (646) 282-2500

 

 

104 

 

 

If the Information Agent does not actually receive THIS MASTER BALLOT on or before 5:00 p.m. (new york time) on may 28, 2020. the relevant dgl1 scheme creditor’s vote will not be counted , unless the relevant DGL1 NOTEHOLDER (or you as their nominee) attendS the Scheme Meeting in person OR INSTRUCTIONS ARE SUBMITTED VIA THE TENDER OFFER.

 

MASTER PROXIES MAY BE SUBMITTED BY EMAIL TO: tabulation@epiqglobal.com

 

MASTER PROXIES SENT BY FACSIMILE OR TELECOPY WILL NOT BE ACCEPTED. 

 

105 

 

 

DTC Participants

 

 

INSTRUCTIONS FOR COMPLETING THIS MASTER BALLOT

 

 

1.The Company is soliciting the votes of DGL1 Scheme Creditors with respect to the Scheme. Capitalized terms used in the Master Ballot or in these instructions (the “Master Ballot Instructions”) but not otherwise defined therein or herein shall have the meaning set forth in the Explanatory Statement, a copy of which also accompanies the Master Ballot.

 

2.the following procedures will not apply TO ANY DGL1 NOTEHOLDERS THAT have delivered theIR instructions VIA the tender offer PRIOR TO THE RECORD DATE on either your own behalf or on behalf of any dgl1 noteholder.

 

3.You must distribute Instruction Packet(s), including Beneficial Holders Ballots, to each DGL1 Noteholder (and their INTERMEDIARIES) of existing Notes as of the Record Date and take any action required to enable each such DGL1 NOTEHOLDER to timely vote their Scheme Claims, provided they have not deliver instructions prior to the record date

 

4.If it is your standard and accepted practice to collect proxy elections and votes from your Beneficial Holder clients by VIF, e-mail, online voting, facsimile, telephone, or other customary methods, you may employ those methods to collect the proxy elections and votes on the Scheme in lieu of a Beneficial Holder Ballot.

 

5.If you are both the DGL1 noteholder and DTC PARTICIPANT of any principal amount of the EXISTING Notes and you wish to vote any Scheme Claims on account thereof, then you MUST complete and execute an individual Beneficial Holder Ballot and return the same to the Information Agent in accordance with these instructions and the instructions attached to such Beneficial Holder Ballot, OR DELIVER THE INSTRUCTIONS VIA THE TENDER OFFER.

 

6.If you DO NOT HOLD THE EXISTING NOTES FOR YOUR OWN ACCOUNT, you must:

 

i.immediately forward the Instruction Packet(s) sent to you by the Information Agent to each DGL1 Noteholder (or their Intermediary) for voting, including: (a) the Beneficial Holder Ballot; (b) a return envelope addressed to you; and (c) clear instructions stating that DGL1 Noteholders must return their Beneficial Holder Ballot directly to you so that it is actually received by you with enough time for you to prepare the Master Ballot in accordance with paragraph (ii) directly below and return the Master Ballot to the Information Agent so it is actually received by the Information Agent on or before the Voting Instruction Deadline; and

 

ii.upon receipt of completed, executed Beneficial Holder Ballots returned to you by a DGL1 Noteholder you must:

 

106 

 

Øcheck the appropriate box in Item 1 of the Master ballot;

 

Øcompile and validate the votes, elections, and other relevant information of each such DGL1 Noteholder in Item 2A and Item 2B of the Master BALLOT using the customer account number or other identification number assigned by you to each such Beneficial Holder;

 

Øcompile the information of each such DGL1 Noteholder in Item 3 of the Master BALLOT using the customer account number or other identification number assigned to each such DGL1 Noteholder;

 

ØRead and acknowledge the certifications in Item 4 by executing Item 4 and providing all information requested in Item 4;

 

Øtransmit such Master BALLOT to the Information Agent on or before the Voting Instruction Deadline; and

 

Øretain such Beneficial Holder Ballots in your files for a period of at least one year after the Effective Date of the Scheme (as you may be ordered to produce the Beneficial Holder Ballots to the Company).1

 

7.If a Master BALLOT is received after the Voting Instruction Deadline, unless you or the relevant DGL1 Noteholder attends the Scheme Meeting in person, the relevant Scheme Claims will not be voted. Additionally, the following Master Proxies (and therefore Beneficial Holder Ballots reflected thereon) will NOT be counted:

 

Øany Master Ballot that is illegible or contains insufficient information to permit the identification of the claimant;

 

Øany Master Ballot cast by a person or entity that does not hold a Scheme Claim;

 

Øany Master Ballot that is properly completed, executed and timely filed, but does not indicate an appointment of a Proxy;

 

Øany Master Ballot submitted by facsimile or telecopy;

 

Øany unsigned Master Ballot;

 

Øany Master Ballot sent to the Company, the Company’s agents/representatives (other than the Information Agent), any indenture trustee, or the Company’s financial or legal advisors; and/or

 

 

 

 

1 If you collected proxy elections and votes through a customary method in lieu of a Beneficial Holder Ballot, you are obligated to preserve such communication conveying the proxy election and vote for one year after the Scheme Effective Date

 

 

 

107 

 

Øany Master Ballot not cast in accordance with the procedures set forth in the Explanatory Statement as approved by the Bermuda Court.

 

8.Any Ballot returned to you by a DGL1 Noteholder WHO ALSO HOLDS a Scheme Claim shall not be counted for purposes of accepting or rejecting the Scheme until you properly complete and deliver to the Information Agent a Master Ballot that appoints a Proxy and reflects the vote of such DGL1 Noteholder on or before the Voting instruction Deadline or otherwise validate the Beneficial Holder Ballot in a manner acceptable to the Information Agent.

 

9.The method of delivery of Master Proxies to the Information Agent is at the election and risk of each dtc participant. Except as otherwise provided herein, such delivery will be deemed made only when the Information Agent actually receives THE EXECUTED MASTER BALLOT. PLEASE SUBMIT THE MASTER BALLOT VIA EMAIL IN ACCORDANCE WITH THE INSTRUCTIONS FOR DELIVERY.

 

10.If multiple Master Proxies are received from the same DTC PARTICIPANT with respect to the same Beneficial Holder Ballot belonging to a DGL1 Noteholder of a Scheme Claim prior to the Voting INSTRUCTION Deadline, the last Master Ballot timely received will supersede and revoke any earlier received Master Proxies. If you receive more than one Beneficial Holder Ballot from the same DGL1 Noteholder, the latest dated Beneficial Holder Ballot you receive before you submit the Master Ballot shall be deemed to supersede any prior Beneficial Holder Ballots submitted by such DGL1 Noteholder and you should complete the Master Ballot accordingly.

 

11.The Master Ballot is not a letter of transmittal and may not be used for any purpose other than to appoint a Proxy to vote at the Scheme Meeting. Accordingly, at this time, Holders of Scheme Claims should not surrender certificates or instruments representing or evidencing their Scheme Claims and you should not accept delivery of any such certificates or instruments surrendered together with a Beneficial Holder Ballot.

 

12.This Master Ballot does not constitute, and shall not be deemed to be, (a) a proof of a Scheme Claim or (b) an assertion or admission of a Scheme Claim.

 

13.Please be sure to properly execute your Master Ballot. You must: (a) sign and date your Master Ballot; (b) if applicable, indicate that you are signing a Master Ballot in your capacity as a trustee, executor, administrator, guardian, attorney in fact, officer of a corporation or otherwise acting in a fiduciary or representative capacity and, if required or requested by the Information Agent or the Company, submit proper evidence to the requesting party to so act on behalf of such DGL1 Noteholder.

 

14.No fees or commissions or other remuneration will be payable to any Intermediary for soliciting Beneficial Holder Ballots. The Company will, however, upon request, reimburse you for customary mailing and handling expenses incurred by you in forwarding the Beneficial Holder Ballots and other enclosed materials to your customers.

 

108 

 

PLEASE SUBMIT YOUR MASTER ballot PROMPTLY!

 

IF YOU HAVE ANY QUESTIONS REGARDING THIS MASTER BALLOT
OR THE VOTING INSTRUCTIONS OR PROCEDURES, PLEASE CONTACT

 

THE INFORMATION AGENT AT+1 (646) 282-2500

 

Or

 

via email: tabulation@epiqglobal.com

 

NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU
OR ANY OTHER ENTITY THE AGENT OF THE COMPANY OR THE INFORMATION AGENT OR AUTHORIZE YOU OR ANY OTHER ENTITY TO USE ANY DOCUMENT OR MAKE
ANY STATEMENTS ON BEHALF OF THE COMPANY WITH RESPECT TO THE SCHEME.

 

IF THE INFORMATION AGENT DOES NOT ACTUALLY RECEIVE THIS MASTER BALLOT ON OR BEFORE THE VOTING INSTRUCTION DEADLINE, WHICH IS 5:00 P.M. NEW YORK TIME ON MAY 28, 2020, THEN THE VOTES TRANSMITTED THEREBY WILL NOT BE COUNTED.

 

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR ADVICE, OR TO MAKE ANY REPRESENTATION, REGARDING THE COMPANY OR THE SCHEME, OTHER THAN WHAT IS CONTAINED IN THE INSTRUCTION PACKET MAILED HEREWITH.

 

 

 

 

 

109 

 

FORM OF BENEFICIAL HOLDER BALLOT

 

IN THE SUPREME COURT OF BERMUDA

COMPANIES (WINDING UP)

2020: No.

 

IN THE MATTER OF DIGICEL GROUP ONE LIMITED

(IN PROVISIONAL LIQUIDATION)

AND

 

IN THE MATTER OF THE COMPANIES ACT 1981

 

$1,000,000,000 8.250% Senior Notes due 2022, issued by the Company

CUSIP/ISIN: 25382DAA4 / US25382DAA46;

G27634AA5 / USG27634AA56

 

(the “Existing Notes”)

 

BENEFICIAL HOLDER BALLOT

 

IN RESPECT OF A CREDITORS’ SCHEME OF ARRANGEMENT

 

IF YOU ARE A DGL1 NOTEHOLDER, AS OF MAY 13, 2020
(THE “RECORD DATE”), PLEASE READ AND FOLLOW THE ENCLOSED INSTRUCTIONS FOR COMPLETING THIS BENEFICIAL HOLDER BALLOT CAREFULLY BEFORE COMPLETING THIS BALLOT.

 

THIS BALLOT SHOULD ONLY BE COMPLETED WHERE YOU HAVE NOT CAUSED YOUR RESPECTIVE INTERMEDIARIES AND/OR DTC PARTICIPANTS TO SUBMIT INSTRUCTIONS VIA THE TENDER OFFER.

 

IN ORDER FOR YOUR PROXY ELECTION AND VOTE TO BE COUNTED, SUCH PROXY ELECTION AND VOTE MUST BE INCLUDED ON A MASTER BALLOT THAT IS COMPLETED, EXECUTED AND RETURNED SO AS TO BE
ACTUALLY RECEIVED BY EPIQ CORPORATE RESTRUCTURING LLC (THE “INFORMATION AGENT”)
ON OR BEFORE 5:00 P.M. NEW YORK TIME ON MAY 28, 2020
(THE “VOTING INSTRUCTION DEADLINE”) IN ACCORDANCE WITH THE FOLLOWING:

 

IF YOU RECEIVED A RETURN ENVELOPE ADDRESSED TO YOUR INTERMEDIARY OWNER:2

 

YOU MUST RETURN THIS BENEFICIAL HOLDER BALLOT TO YOUR INTERMEDIARY (OR OTHERWISE CONVEY YOUR PROXY ELECTION AND VOTE TO YOUR INTERMEDIARY IN ACCORDANCE WITH THE INSTRUCTIONS PROVIDED BY YOUR INTERMEDIARY) IN SUFFICIENT TIME TO PERMIT YOUR INTERMEDIARY TO DELIVER YOUR PROXY ELECTION AND VOTE TO THE INFORMATION AGENT SO IT IS ACTUALLY RECEIVED ON OR BEFORE THE VOTING INSTRUCTION DEADLINE. PLEASE FOLLOW THE INSTRUCTIONS OF YOUR INTERMEDIARY TO RETURN YOUR PROXY ELECTION AND VOTE ON THE SCHEME.

 

 

 

 

2Intermediary” means the bank, brokerage firm, or the agent thereof as the entity through which you hold interests in your Existing Notes.

 

110 

 

Digicel Group One Limited, ( “DGL1” or the “Company) is soliciting votes with respect a scheme of arrangement (the “Scheme”) implemented under Bermuda law in parallel with a Tender Offer commenced by DGL1 FROM dgl1 Noteholders who have not already provided their Instructions via the Tender Offer.

 

You have been provided with this Ballot as part of the Instruction Packet which contains an explanatory statement (“Explanatory Statement”) relating to the Scheme. Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Explanatory Statement. YOU ARE ENCOURAGED TO READ THE MATERIALS CONTAINED IN THE INSTRUCTION PACKAGE IN FULL. The Scheme, if implemented will materially affect the rights of holders of the Existing Notes.

 

Your rights are described in the Explanatory Statement, which includes the Scheme. If have any questions regarding any of the contents of the Instruction Package, you may contact the Information Agent by: (1) visiting the Scheme Website at https://dm.epiq11.com/Digicel; or (2) writing to the Company, c/o Epiq Corporate Restructuring LLC, at tabulation@epiqglobal.com or (3) by calling +1 (646) 282-2500 and asking to speak with a member of the Solicitation Group.

 

This Beneficial Holder Ballot may not be used for any purpose other than to appoint a proxy to cast votes to accept or reject the Scheme at the Scheme Meeting. If you believe you have received this Beneficial Holder Ballot in error, or if you believe that you have received the wrong Ballot, please contact your Intermediary immediately.

 

THIS BALLOT SHOULD ONLY BE COMPLETED WHERE YOU HAVE NOT CAUSED YOUR RESPECTIVE INTERMEDIARIES AND/OR DTC PARTICIPANTS TO SUBMIT INSTRUCTIONS VIA THE TENDER OFFER PRIOR TO THE RECORD DATE.

 

You should review the Explanatory Statement and the Scheme in their entirety before you vote. You may wish to seek legal advice concerning the Scheme.

 

The Bermuda Court may sanction the Scheme and bind you if the Scheme is accepted by DGL1 Scheme Creditors of at least seventy-five percent by value and a majority in number of those DGL1 Scheme Creditors voting (in person or by proxy) at the Scheme Meeting.

 

To have your vote counted at the Scheme Meeting, you must either (i) attend the Scheme Meeting (the time and venue of which is as per the Notice of Scheme Meeting included in the Instruction Package) or (ii) appoint a proxy to attend the Scheme Meeting and vote on your behalf by completing this Ballot pursuant to the instructions provided herein and indicating how your proxy should vote at the Scheme Meeting.

 

Before completing this Beneficial Holder Ballot, please read and follow the enclosed “Instructions for Completing this Beneficial Holder Ballot” carefully to ensure that you complete, execute and return this Beneficial Holder Ballot properly.

 

111 

 

Item 1. Amount of Claim.

 

The undersigned hereby certifies that as of the Record Date, which is May 13, 2020, the undersigned was the DGL1 Noteholder 3 (or authorized signatory for the DGL1 Noteholder) of Existing Notes and in the following aggregate unpaid principal amount (insert unpaid principal amount in box below if not already entered). If your Existing Notes are held by a Intermediary on your behalf and you do not know the amount of the Existing Notes held, please contact your Intermediary immediately:

 

$___________________________________

 

If you have previously delivered Instructions in respect of any Existing Notes via the Tender Offer but have subsequently acquired additional Existing Notes that have not yet been tendered by the Record Date, you should not use this Ballot without further instruction from the Information Agent. Please contact the Information Agent for further instructions.

 

Item 2. Appointment of Proxy.

 

The DGL1 Noteholder of the Scheme Claims against the Company as set forth in Item 1 above grants the proxy set forth below for the Scheme Meeting. (Please check one box below):

 

      Appoints the Chairman as proxy

      Does NOT appoint the Chairman as proxy; rather, appoints the following individual as its proxy:

 

Name: ________________________________________________________________

 

Street Address: ________________________________________________________

 

Street Address: ________________________________________________________

 

City, State, Zip: ________________________________________________________

 

Country: ______________________________________________________________

 

Telephone Number: _____________________________________________________

 

E-Mail Address: ________________________________________________________

 

 

 

 

 

 

 

3 That is, the entity, with the ultimate economic interest and beneficial ownership of the relevant Existing Notes.

 

 

 

 

112 

 

 

 

Item 3. Vote on Scheme of Arrangement.

 

The DGL1 Noteholder of the Scheme Claims against the Company set forth in Item 1 directs its Proxy to vote on the Scheme as follows. (Please check one box below):

  

☐       ACCEPT (vote FOR) the Scheme
☐       REJECT (vote AGAINST) the Scheme

☐       DISCRETIONARY VOTE (grant proxy set forth above the ability to vote on the Scheme at the proxy’s discretion)

 

(This discretionary vote is open to only those that appointed a proxy other than the Chairman.)

 


(If you appoint the Chairman as proxy and check this “Discretionary Vote” box, it will be assumed that you are directing the Chairman to vote to accept the Scheme and your vote will be counted accordingly.)

 

 

 

 

113 

 

Item 4.Certifications of Scheme Claims held in Additional Accounts.

 

By completing and returning this Beneficial Holder Ballot, the undersigned DGL1 Noteholder certifies that it has not delivered, nor has it caused to be delivered, Instructions in respect of the Existing Notes in the Tender Offer and that either (1) it has not submitted any other Ballots for other Scheme Claims held in other accounts or other record names, or (2) it has provided the information specified in the following table for all Scheme Claims for which it has submitted additional Beneficial Holder Proxies, each of which indicates the appointment and vote to accept or reject the Scheme (please use additional sheets of paper if necessary):

 

ONLY COMPLETE THIS SECTION IF YOU HAVE VOTED SCHEME CLAIMS ON A
BENEFICIAL HOLDER BALLOT OTHER THAN THIS BENEFICIAL HOLDER BALLOT.

 

Name of Beneficial Holder Account Number or VOI Number 1 Intermediary  Amount of Other Scheme Claims Voted2
1.                         $
2.                         $
3.                         $
4.                         $
5.                         $
6.                         $
7.                         $
8.                         $
9.                         $
10.                        $

 

 

 

 

 

1 If VOI Number is used, then no other information is needed in the particular row.

 

2 Insert principal amount of Existing Notes

 

 

 

114 

 

Item 5.Certifications.

 

By signing this Beneficial Holder Ballot, the undersigned certifies to the Company:

 

a.that either: (i) the undersigned is the DGL1 Noteholder of the Scheme Claims being voted; or (ii) the undersigned is an authorized signatory for an entity that is a DGL1 Noteholder of Scheme Claims being voted, and, in either case, has full power and authority to vote to accept or reject the Scheme with respect to the Scheme Claims identified in Item 1 above;

 

b.that the undersigned (or in the case of an authorized signatory, the DGL1 Noteholder) has received a copy of the Explanatory Statement and the Instruction Packet and acknowledges that the solicitation is being made pursuant to the terms and conditions set forth therein;

 

c.that the undersigned has appointed the same proxy and directed them to cast the same vote with respect to all Scheme Claims;

 

d.that the undersigned has disclosed any Existing Notes for which it has delivered Instructions via the Tender Offer; and

 

e.that no other Beneficial Holder Proxies with respect to the amount of the Scheme Claims identified in Item 1 above have been cast or, if any other Beneficial Holder Proxies have been cast with respect to such Scheme Claims, then any such earlier Beneficial Holder Proxies are hereby revoked.

 

By signing this Beneficial Holder Ballot, the undersigned authorizes and instructs its Intermediary (unless this is a Beneficial Holder Ballot of a party that holds the Existing Notes as both a DGL1 Noteholder and registered holder) (a) to furnish the voting information and the amount of Scheme Claims the Intermediary holds on its behalf to its DTC Participant for inclusion in a Master Ballot to be transmitted to the Information Agent and (b) for the DTC Participant to retain this Beneficial Holder Ballot and related information in its records for at least one year after the Scheme Effective Date.

 

115 

 

 

 

Name of
Holder:
 
  (Print or Type)
Social Security or Federal Tax Identification Number:  
Signature:  
Name of Signatory:  
  (If other than Holder)
Title:  
Address:  
   
   
Date Completed:  
   
           

No fees, commissions or other remuneration will be payable to any person for soliciting votes on the Scheme.

 

If your address or contact information has changed, please note the new information here.

 

PLEASE COMPLETE, SIGN AND DATE THIS BENEFICIAL HOLDER BALLOT AND RETURN IT PROMPTLY AS DIRECTED BY NOMINEE OR DTC PARTICIPANT.

 

If the INFORMATION Agent does not actually receive A MASTER BALLOT INCORPORATING YOUR PROXY ELECTION AND VOTE on or before 5:00 P.m. new york Time on May 28, 2020 ,AND YOU HAVE NOT DELIVERED INSTRUCTIONS PRIOR TO THE RECORD DATE THEN YOUR SCHEME CLAIM will not be VOTED UNLESS YOU ATTEND THE SCHEME MEETING IN PERSON

 

IF YOU ARE RETURNING THIS BENEFICIAL HOLDER BALLOT TO YOUR INTERMEDIARY OR DTC PARTICIPANT (OR OTHERWISE CONVEYING YOUR PROXY ELECTION AND VOTE TO YOUR INTERMEDIARY OR DTC PARTICIPANT IN ACCORDANCE WITH THEIR INSTRUCTIONS), PLEASE ALLOW SUFFICIENT TIME TO PERMIT YOUR INTERMEDIARY TO FORWARD YOUR BALLOT TO ITS DTC PARTICIPANT (IF YOUR INTERMEDIARY IS NOT A DTC PARTICIPANT) OR COMPLETE A MASTER BALLOT (IF YOUR INTERMEDIARY IS A DTC PARTICIPANT) TO INCLUDE YOUR VOTE ON A MASTER BALLOT SUCH THAT THE MASTER BALLOT IS ACTUALLY RECEIVED BY THE INFORMATION AGENT ON OR BEFORE 5:00 P.M. NEW YORK TIME ON May 28, 2020.

 

 

 

 

116 

 

 

 

INSTRUCTIONS FOR COMPLETING THIS BENEFICIAL HOLDER BALLOT

 

1.The Company is soliciting the votes of DGL1 Scheme Creditors with respect to the Scheme. Capitalized terms used in the Beneficial Holder Ballot or in these instructions (the “Ballot Instructions”) but not otherwise defined therein or herein shall have the meaning set forth in the Explanatory Statement, a copy of which also accompanies the Beneficial Holder Ballot.

 

2.To ensure that your vote is counted, you must EITHER complete the Beneficial Holder Ballot, appoint a Proxy and take the following steps: (a) make sure that the information required by Item 1 and Item 1A above has been correctly inserted (if you do not know the amount of your claim, please contact your Intermediary); (b) select a proxy in Item 2 above; (c) clearly indicate how your proxy should vote your Scheme Claim in Item 3 above; (d) provide the information required by Item 4 above, if applicable; (e) read and certify the information contained in this Beneficial Holder Ballot, including but not limited to the statements in Item 5 above; and (f) sign, date and return an original of your Beneficial Holder Ballot in accordance with paragraph 3 directly below OR attend the Scheme Meeting in person. BALLOTS SHOULD ONLY BE USED WHERE YOU HAVE NOT DELIVERED (OR HAVE CAUSED TO BE DELIVERED) INSTRUCTIONS IN THE TENDER OFFER PRIOR TO THE RECORD DATE.

 

3.Submission of Beneficial Holder Ballot Election and Votes: If voting by a Beneficial Holder Ballot, your proxy election and vote must be incorporated in a Master Ballot that is returned to the Information Agent so as to be actually received by the Information Agent on or before the Voting Instruction Deadline, which is 5:00 p.m. New York Time on May 28, 2020. Please follow the directions of your Nominee or DTC Participant with respect to the submission of your Beneficial Holder Ballot..

 

4.If a Master Ballot or Beneficial Ballot is received by the Information Agent after the Voting Instruction Deadline, it will not be counted and you must attend the Scheme Meeting in person to vote your Scheme Claim. Additionally, the following Beneficial Holder Proxies will NOT be counted:

 

Øany Beneficial Holder Ballot that is illegible or contains insufficient information to permit the identification of the claimant;

 

Øany Beneficial Holder Ballot cast by a person or entity that does not hold a Scheme Claim;

 

Øany Beneficial Holder Ballot that is properly completed, executed and timely filed, but does not indicate an appointment of a proxy;

 

Øany unsigned Beneficial Holder Ballot;

 

Øany Beneficial Holder Ballot sent to the Company, the Company’s agents/representatives (other than the Information Agent), any indenture trustee, or the Company’s financial or legal advisors; and/or

 

Øany Beneficial Holder Ballot not cast in accordance with the procedures set out in the Explanatory Statement as approved by the Bermuda Court.

 

5.Except as otherwise provided herein, such delivery will be deemed made to the Information Agent only when the Information Agent actually receives the executed Master Ballot incorporating the Beneficial Holder Ballot. Please allow sufficient time to assure timely delivery.

 

6.Your Intermediary is authorized to collect Ballots from beneficial holders in accordance with their customary practices, including the use of a “voting instruction form” in lieu of (or in addition to) a Beneficial Holder Ballot, as well as collecting votes from beneficial holders through online voting, by phone, facsimile, or other electronic means.

 

117 

 

7.If multiple proxy elections and votes are received from the same DGL1 Noteholder with respect to the same Scheme Claim prior to the Voting Instruction Deadline, the last proxy election and vote timely received will supersede and revoke any earlier received proxy elections and vote.

 

8.You must appoint a proxy and instruct them to vote in respect of the entirety of your Scheme Claim and may not split your Scheme Claim for the purposes of this Ballot.

 

9.The Beneficial Holder Ballot is not a letter of transmittal and may not be used for any purpose other than to appoint a proxy to vote at the Scheme Meeting. Accordingly, at this time, DGL1 Noteholders of Scheme Claims should not surrender certificates or instruments representing or evidencing their Scheme Claims, and neither the Company nor the Information Agent will accept delivery of any such certificates or instruments surrendered together with a Beneficial Holder Ballot.

 

10.This Beneficial Holder Ballot does not constitute, and shall not be deemed to be, (a) a proof of a Scheme Claim or (b) an assertion or admission of a Scheme Claim.

 

11.Please be sure to sign and date your Beneficial Holder Ballot. If you are signing a Beneficial Holder Ballot in your capacity as a trustee, executor, administrator, guardian, attorney in fact, officer of a corporation or otherwise acting in a fiduciary or representative capacity, you must indicate such capacity when signing and, if required or requested by the Information Agent or the Company, must submit proper evidence to the requesting party to so act on behalf of such DGL1 Noteholder. In addition, please provide your name and mailing address if it is different from that set forth on the attached mailing label or if no such mailing label is attached to the Beneficial Holder Ballot.

 

118 

 

PLEASE SUBMIT YOUR BENEFICIAL HOLDER BALLOT ELECTION AND VOTE PROMPTLY!

 

IF YOU HAVE ANY QUESTIONS REGARDING THIS BENEFICIAL HOLDER
BALLOT, THESE VOTING INSTRUCTIONS OR THE PROCEDURES FOR VOTING,

PLEASE CONTACT YOUR INTERMEDIARY IMMEDIATELY

 

If the INFORMATION Agent does not actually receive A MASTER BALLOT INCLUDING YOUR PROXY ELECTION AND VOTE oN OR before the Voting INSTRUCTION Deadline, which is 5:00 P.m. NEW YORK TIME on MAY 28, 2020, OR IF YOU HAVE NOT CAUSED INSTRUCTIONS TO BE DELIVERED ON YOUR BEHALF VIA THE TENDER OFFER PRIOR TO THE RECORD DATE then YOUR EXISTING nOTES SHALL NOT BE VOTED AT THE SCHEME MEETING UNLESS YOU ATTEND THE SCHEME MEETING IN PERSON.

 

 

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR ADVICE, OR TO MAKE ANY REPRESENTATION, REGARDING THE COMPANY OR THE SCHEME, OTHER THAN WHAT IS CONTAINED IN THE INSTRUCTION PACKAGE MAILED HEREWITH.

 

 

 

 

 

119 

 

APPENDIX 3
NOTICE OF SCHEME MEETING

 

IN THE SUPREME COURT OF BERMUDA
CIVIL JURISDICTION
COMMERCIAL COURT

 

2020: NO. 149

 

IN THE MATTER OF DIGICEL GROUP ONE LIMITED

 

(in provisional liquidation)

 


and

 

IN THE MATTER OF SECTION 99 OF THE COMPANIES ACT 1981

 

NOTICE IS HEREBY GIVEN that, by an order dated May 12, 2020 made in the above matter, the Supreme Court of Bermuda has directed that a meeting be convened of the DGL1 Scheme Creditors (as defined in the Scheme) of Digicel Group One Limited (the “Company”) for the purposes of considering and, if thought fit, approving (with or without modification, addition or condition approved or imposed by the Bermuda Court and agreed by the Company) a scheme of arrangement proposed to be made between the Company and the DGL1 Scheme Creditors.

 

A copy of the Scheme and a copy of the statement required to be furnished pursuant to sections 99 and 100(1)(a) of the Bermuda Companies Act (the “Explanatory Statement”) are incorporated in the document of which this notice forms part. Unless otherwise defined, capitalised terms used in this notice shall have the meaning given to those terms in the Explanatory Statement.

 

The Scheme Meeting will be held at 8:00 a.m. (New York Time) / 9:00 a.m. (Bermuda Time) on June 1, 2020 via conference call using the following details: +1 917-933-2314 (US), +44 20 3787 4277 (UK), Conference ID: 569 450 771#. All DGL1 Scheme Creditors are invited to attend either in person, by a duly authorised representative if a corporation, or by proxy. DGL1 Scheme Creditors who have difficulty accessing the Scheme Meeting should contact any one of the following numbers for assistance: +1-441-531-1888, +1-441-294-2718 or +1-441-518-4428.

 

DGL1 Scheme Creditors may vote in person or by a duly authorised representative if a corporation, at the Scheme Meeting or they may appoint another person, whether a DGL1 Scheme Creditor or not, as their proxy to attend and vote in their place. DGL1 Scheme Creditors may appoint proxies to vote at the Scheme Meeting by filling out the appropriate Ballot included in the Explanatory Statement. If a DGL1 Scheme Creditor is a corporation, in order to be entitled to vote at the Bermuda Scheme Meeting such corporation must appoint an authorised representative or proxy to vote on its behalf. Completion and submission of a completed Ballot will not preclude a DGL1 Scheme Creditor from attending and voting in person at the Scheme Meeting or any adjournment thereof.

 

If you are a DGL1 Scheme Creditors that has delivered Instructions prior to the Record Date you must NOT complete a Ballot to vote by proxy at the Scheme Meeting. Any such a DGL1 Scheme Creditor will, by virtue of delivering Instructions, have appointed Epiq Corporate Restructuring LLC (the “Information Agent”) as their agent and attorney-in-fact for the purposes of voting on the Scheme pursuant to the terms of the Tender Offer to holders of the Existing Notes commenced by the Company on April 1, 2020, pursuant to a Tender Offer Memorandum of the same date.

 

Entitlements to vote shall be assessed at the Record Date being close of business on May 13, 2020. To avoid double counting in respect of the Scheme Claims, each of the Existing Notes Trustee and the Existing Depository Nominee have been directed by the Bermuda Court not to vote at the Scheme Meeting.

 

Each DGL1 Scheme Creditor or its proxy attending in person will be required to register its attendance at the Scheme Meeting.

 

120 

 

Each DGL1 Scheme Creditor that is not voting by proxy and is intending to vote in person at the Scheme Meeting must provide: (i) a duplicate copy of the validly completed Ballot (in any) delivered on their behalf; (ii) evidence of their Beneficial Interest in the Existing Notes as of the Record Date with accompanying proof from the relevant DTC Participant; (iii) evidence of corporate authority (in the case of a corporation) (for example, a valid power of attorney and/or board minutes); and (iv) evidence of personal identity (a passport or other equivalent identification), in each case by email to DGL1@kpmg.bm no later than thirty minutes before the scheduled time of the Scheme Meeting for the purposes of registering a DGL1 Scheme Creditor’s attendance at the Scheme Meeting.

 

In order to vote on the Scheme and attend the Scheme Meeting by proxy, DGL1 Scheme Creditors must ensure that either a Ballot is validly completed, submitted to and received by the Information Agent in accordance with the instructions set out in the Instruction Packet before the Voting Instruction Deadline, being 5:00 p.m. (New York time) on May 28, 2020, or by having delivered Instructions via the Tender Offer pursuant to the procedures described in the Tender Offer Memorandum prior to the Record Date.

 

The Scheme, the Explanatory Statement and the Instruction Packet (containing sample forms of the Ballots) will be available to download from the Scheme Website on or around May 15, 2020. If a hard copy is required, please send your request to the Information Agent at the email address shown below. Ballots will be circulated to the relevant DGL1 Scheme Creditors by the bank, broker, or other nominee that holds such DGL1 Scheme Creditor’s Existing Notes.

 

By the order referred to above, the Bermuda Court has appointed any one of the Provisional Liquidators, to act as Chairman of the Scheme Meeting (and any adjournment thereof) and has directed the Chairman to report the result of the Scheme Meeting to the Bermuda Court.

 

For further information in this regard, please contact the Information Agent by electronic mail to tabulation@epiqglobal.com (please reference “Digicel Scheme” in the subject line).

 

Dated __________________

 

Digicel Group One Limited

 

121 

 

APPENDIX 4
KPMG LIQUIDATION ANALYSIS

 

122 

 

 

 

Digicel Group One Limited Liquidation Analysis Report Restructuring 7 May 2020 123

 

 

2 © 2020 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 124 DR A F T The reader of this report understands that the work performed by KPMG Ireland (hereafter “KPMG”) was performed in accordance with the terms of engagement agreed between Digicel Group One Limited (“DGL 1 ”) and KPMG and was performed exclusively for DGL 1 ’s sole benefit and use . The basis of preparation of the attached report is discussed below . This Report is for the benefit of DGL 1 and has been released to DGL 1 on the basis that it shall not be copied, referred to or disclosed, in whole or in part, without our prior written consent . The reader of this report acknowledges that this report was prepared at the direction of DGL1, who is responsible for determining whether the terms of reference and the report consider all aspects that may be relevant to DGL1’s needs. The report reflects the specific information requirements of DGL1 and may not consider all aspects that may be relevant for the needs of any other reader. The report should thus not be regarded as suitable for use or reliance by any person or persons other than DGL1. This Report is not suitable to be relied on by any party wishing to acquire rights against KPMG (other than DGL1) for any purpose or in any context. Any party other than DGL1, including DGL1 noteholders (the Noteholders) and other creditors of DGL1, that obtains access to this Report or a copy and chooses to rely on this Report (or any part of it) does so at its own risk. To the fullest extent permitted by law, KPMG does not assume any responsibility and will not accept any liability in respect of this Report to any party other. The report should thus not be regarded as suitable for use or reliance by any person or persons other than DGL1. We have satisfied ourselves, so far as possible, that the information presented in our report is consistent with other information which was made available to us in the course of our work in accordance with the terms of our Engagement Letter . We have not, however, sought to establish the reliability of the sources by reference to other evidence . Our report makes reference to ‘KPMG Analysis’; this indicates only that we have (where specified) undertaken certain analytical activities on the underlying data to arrive at the information presented; we do not accept responsibility for the underlying data, but we have agreed the figures to unaudited financial accounts, where appropriate. The directors of DGL1 have confirmed the factual accuracy of this report. Nothing in this report constitutes legal advice, or a recommendation as to any particular course of action. DGL1 - Liquidation Analysis Report Important notice

 

 

Background 125

 

 

DR A F T Our analysis assumes an insolvency date of 31 March 2020 The purpose of the liquidation analysis is to forecast indicative recovery rates for the different DGL1 creditor groups in a hypothetical insolvency scenario We are providing a Liquidation Analysis to the Board of Directors of DGL1 in the context of the overall Digicel group debt restructuring. DGL1 is in active discussions with its stakeholders, with a view to restructuring its debt through a formal, court - supervised Scheme of Arrangement involving a Provisional Liquidation of DGL1 for the purposes of restructuring. DGL1 is an intermediate holding company of Digicel Group Limited (“the Group”). Its assets comprise key group investments across the following three geographical areas: © 2020 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 126 4 • the Caribbean through Digicel Limited (“DL”); • the Pacific through Digicel Pacific Limited (“DPL”); and • its interest in Panama through Digicel Holdings (Central America) Limited (“DHCAL”). As an intermediate holding company, DGL1 has no employees [ aside from the Group CEO ] or trade of its own. The purpose of this Liquidation Analysis is to understand the potential return to DGL1’s creditors assuming it had entered liquidation on 31 March 2020. Note that there are a significant number of variables in an insolvency of such a large and diverse group, and as such our analysis should only be regarded as indicative of how an insolvency might unfold. For example, whilst we have assumed that DL and DPL can be sold as stand alone entities, in practice sales may only be achieved on a break up and piecemeal realisation of assets, or an unpredictable combination of both asset sales and business unit sales. This analysis can be used as one benchmark against which the proposed terms of the Group’s restructuring can be assessed. In order to provide context to the outcomes derived from the Liquidation Analysis, we summarise below our approach and methodology to preparing the Liquidation Analysis. Our analysis is based on legal advice received by Management confirming that DGL1’s noteholders have recourse only to DGL1’s assets and have no guarantees or security from any other Group company and that the Noteholders claims should be in priority to unsecured creditor claims, on account of liens and pledges in relation to DGL1’s assets which KPMG have not independently verified or validated. We are not providing legal advice in this regard. DGL1 - Liquidation Analysis Report Background

 

 

DR A F T We have assessed the assets and liabilities of DGL1 against which DGL1’s creditors could establish a claim We have valued the main operating businesses in the Caribbean and Pacific using both the Income and Market approaches. The Panamanian operations have been valued on a break - up basis. A pp r o ac h © 2020 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 127 5 — The Liquidation Analysis is an illustrative analysis of a hypothetical liquidation of DGL1. — This analysis provides an indictive assessment of the possible realisable value of DGL1’s assets in a liquidation context (based on continuing their operations on a going concern basis where possible), and therefore what is available to distribute to its creditors in a formal insolvency process. Methodology — To Complete the Liquidation Analysis, we have assessed the assets of DGL1 against which DGL1’s creditors could establish a claim. When assessing the quantum of creditors’ claims, the Liquidation Analysis has looked to establish all known guarantee and intercompany claims as well as all DGL1 specific liabilities. — From the available information, we have applied certain assumptions as to the realisable value of the assets, the level of costs that would be incurred both in terms of the insolvency and in realising the value of the underlying business units, and details of any additional known claims. — The main operating assets in the Caribbean (DL) and Pacific (DPL) were valued using the income (discounted cash flow (“DCF”)) and market (comparable public company multiples) approaches using a valuation date of 31 March 2020 (consistent with the insolvency date). — The market approach used Enterprise Value to Earnings Before Interest, Taxes, Depreciation and Amortisation (EV/EBITDA) multiples, based on last 12 months’ EBITDA, as sourced from S&P, Capital IQ. The income or DCF approach analysed the three year forecasts (FY21 - 23) prepared by Management. — In the absence of continuing Group funding which we have assumed would not be forthcoming in an insolvency context, we have concluded that the Panamanian operations would not be independently sustainable and, as such these operations have been valued on a break - up basis. DGL1 - Liquidation Analysis Report Approach and Methodology

 

 

DR A F T DGL1 - Liquidation Analysis Report Overview of Group Holding Company Structure & Indebtedness Digicel Group Ltd (DGL3”) $63m Notes due ’20 $21m Notes due ‘22 Digicel Group Two Ltd (“DGL2”) $937m Notes due ’22 $993m Notes due ‘24 Digicel Group One Ltd (“DGL1”) $1,000m Notes due ‘22 Digicel Ltd (“DL”) $1,300m Notes due ’21 $925m Notes due ‘23 Digicel Holdings (Bermuda) Ltd Digicel International Finance Ltd (“DIFL”) $1,029m TLB due ’24 $600m Sec. Notes due ‘24 Digicel Pacific Ltd (“DPL”) $87.5m Loan Digicel Holdings (Central America) Ltd (“DHCAL”) Panama Oper at ions Caribbean Oper at ions Pacific Oper at ions Bermuda * © 2020 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 128 6 Bermuda * Bermuda * Bermuda * Bermuda * Bermuda * St Lucia * 1. 4% 43.6% Panama * * Place of Incorporation 1. Minority interests in subsidiaries of the Group’s Caribbean and Pacific operations are not shown in this diagram as they are not considered material. 2. Debt amounts exclude accrued interest. 1 1

 

 

Estimated 129 Liquidation Returns – DGL1

 

 

DR A F T The Liquidation Analysis provides an illustration of the estimated realisable values of DGL1’s assets and the return to its creditors The stated balance sheet values are based on DGL1’s draft balance sheet at 31 March 2020 as prepared by Management It is assumed that a Liquidator would require a period of up to 12 months to complete a sale process in order to maximise value from DGL1’s investment in DPL In a low case realisation scenario the return to DGL1’s Noteholders is estimated to be c.47% In a high case realisation scenario the return to DGL1’s Noteholders is estimated to be c.60% In both scenarios there would be no return for DGL1’s unsecured creditors DGL1 - Liquidation Analysis Report Estimated Liquidation Returns – DGL1 Source: Draft balance sheet at 31 March 2020 per Management and KPMG Analysis E s t i m a DGL1 - Estimated Liquidation Returns - Insolvency Date 31 March 20 USD $'000's Low Case High Case Realisable Assets Balance Sheet at 31 March 20 Estimated realisable value Realisation % Estimated realisable value Realisation % Non - current assets Digicel Limited Digicel Pacific Limited Cricket Sporting Investments Shareholder loan - DCAGL (at Writen down value) Shareholder loan - CPL 1 805 , 410 9 , 525 25 , 693 9 , 693 - 0% 493 , 92 0 61% - 0% - 0% - 0% - 0% 615 , 23 2 76% 7 , 00 0 73% 16 , 27 1 63% - 0% Total non - current assets Current Assets Prepayments Deferred Fees Intercompany receivables Digicel Group Limited Digicel Group Two Limited Digicel Holdings (Bermuda) Limited Other receivables Unrestricted Cash 850 , 322 493 , 920 638 , 502 318 - 0% - 0% 32 , 374 - 0% - 0% 8 , 853 - 0% - 0% 160 , 590 - 0% - 0% 18 18 100% 18 100% 14 - 0% - 0% 23 , 783 23 , 783 100% 23 , 783 100% Total current assets 225 , 950 23,801 23,801 Total realisable assets 1,076,272 517,721 662,304 Liquidators' fees, expenses and disbursements - ( 33 , 000) ( 33 , 000) Available to DGL1 Noteholders Accrued Interest 41 , 250 41 , 250 100% 41 , 250 100% $1,000m Notes Due 22 1 , 000 , 000 443 , 471 44% 588 , 054 59% Total 1 , 041 , 250 484 , 72 1 47% 629 , 30 4 60% Balance available for unsecured creditors 35,022 (556,529) (411,946) Unsecured creditors Intercompany loan - DPL 126 , 427 - - Other Intercompany Payables 565 , 682 - - Other Creditors / Payables 7 , 418 - - Total unsecured creditors Estimated dividend for unsecured creditors 699,527 - 0% - 0% - - 0% - 0% Surplus / (Shortfall) to All Creditors (1,256,056) (1,111,473) Share Capital 1 Reserves - 664,506 Total Capital Total Liabilities and Reserves 1,076,272 0 0% 0 0% ted Dividend to Shareholders - 0 0 © 2020 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 130 8

 

 

DR A F T © 2020 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 131 9 Summary Estimated Liquidation Returns – DGL1 DGL1 - Liquidation Analysis Report High & Low Outcomes The high and low outcomes comprise the estimated recovery by each creditor class based on the high / low assumptions applied in our analysis and referred to in the section of this report entitled “ Key Assumptions ”. Estimated return to DGL1 Noteholders The estimated total recovery to Senior Secured Noteholders of the Company ranges from US $ 485 million to US $ 629 million in the low and high case scenarios respectively, assuming a projected liquidation process of up to 3 years . This equates to a recovery of between 47 % and 60 % for the Company’s Senior Secured Noteholders . Estimated return to Unsecured Creditors Our estimate indicates that there will be no return to unsecured or any other class of creditor under either the High or Low cases. Shareholders Our estimate indicates that there will be no return to shareholders.

 

 

Key Assumptions 132

 

 

DR A F T Assumptions DGL1 - Liquidation Analysis Report Assumptions There are certain key assumptions that underpin our analysis: 1. The liquidation is based on DGL1’s draft balance sheet as at 31 March 2020 as prepared by Management. 2. The Liquidators would run a sale process to maximise value from DGL1’s investment in DPL. An appointed insolvency practitioner is assumed to take a period of up to 12 months to realise the underlying business units, having regard to the costs of holding the assets (including the risk of deterioration or loss). 3. Based on our assessment of the Enterprise Value of the Group’s Caribbean business we have concluded that a liquidator would determine that realisable value of that business is less than the total indebtedness which is secured by or guaranteed by that business. 4. On the basis that the Panamanian operations would not be independently sustainable in the absence of continuing group funding, which we have assumed would not be forthcoming in an insolvency context, these operations have been valued on a break - up basis. 5. We have assumed that value could be realised from DGL1’s investment in CSI in the High Case scenario only. 6. Cash balances are unrestricted and would be available to a Liquidator in either scenario on appointment. 7. Noteholder claims would be paid in priority to unsecured creditors on account of liens and pledges on DGL1’s assets. We have not sought to verify the validity of the Noteholders’ security, nor whether the charges have been properly registered. For the purposes of the collateral assessment in this report we have assumed the liens and pledges are valid. 8. We have assumed that there are no taxes or stamp duties payable on the sale by DGL1 of its shares in DPL or otherwise in connection with the realisation of other assets other than tax on any recovery under the Orange litigation claim. © 2020 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 133 11

 

 

DR A F T Assumptions DGL1 - Liquidation Analysis Report Overview of assets DGL1 has the following assets: • 100% shareholding in DL; • 100% shareholding in DPL; • 1.4% minority interest in DHCAL; • Shareholder loans with Digicel (Central America) Group Limited (“DCAGL”), effectively reflecting DGL1s principal interest in DHCAL; • 63.37% interest in Cricket Sporting Investments Limited (Bermuda) (“CSI”); • Receivable from Shareholder loan to CPL; • Prepayments & Receivables; • Intercompany Receivables with DGL, DGL2 and Digicel Holdings (Bermuda) Ltd; and • Unrestricted cash. © 2020 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 134 12

 

 

DR A F T Key Assumptions DGL1 - Liquidation Analysis Report Valuation of I n v es tm en ts in DL and DPL General • The Caribbean (DL) and Pacific (DPL) operating businesses (together the “Units”) were valued using the income (discounted cash flow (“DCF”)) and market (comparable public company multiples) approaches using a valuation date of 31 March 2020 (consistent with the insolvency date). Market approach • The market approach used Enterprise Value to Earnings Before Interest, Taxes, Depreciation and Amortisation (EV/EBITDA) multiples as sourced from S&P Capital IQ, based on last 12 months (“LTM”) EBITDA. • The market multiples analysis excluded the effects of IFRS 16 (leases) from both DPL, DL and the comparable companies (“comparables”), i.e. lease rentals were deducted in arriving at EBITDA and lease liabilities were excluded from Enterprise Value to avoid issues with post - IFRS 16 numbers such as a lack of comparability from companies having different remaining lease terms. • Separate comparable companies selections were made for the Caribbean and Pacific business with the former focussed on Latin American (“LATAM”) comparables and the latter on other emerging market (particularly Asian) comparables. This suggested EV/EBITDA multiples of c. 4.7x for the Caribbean business and 4.0x for the Pacific business, based on the median multiples observed in the comparable’s set. • The EBITDA of the Units was adjusted to include DGL holding company costs which benefit the Units, license costs and foreign exchange costs viewed as necessary for the ongoing operations of the business. • Management have reviewed the adjustments made to EBITDA for the purposes of applying the multiples (including the unwinding of the effects of IFRS 16) and have confirmed that they are reasonable. Income approach • The DCF analyses used three year forecasts (FY 21 - 23 ) prepared by Management . EBITDA forecasts were also adjusted to reflect the DGL level costs which benefit the Units, license costs and foreign exchange costs referenced previously as well as the expected lease rentals, consistent with the approach adopted in the market approach . • Management have also reviewed the adjustments made to EBITDA (including the unwinding of the effects of IFRS 16) used in the DCF calculation and confirmed that they are reasonable. © 2020 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 135 13

 

 

DR A F T Key Assumptions DGL1 - Liquidation Analysis Report Valuation of I n v es tm en ts in DL and DPL (continued) Income approach (continued) • A terminal growth rate of 0.5% was applied to cash flows after the end of the forecast period to arrive at a terminal value for the operations. • The discount rates used in the DCF analyses were based on a weighted average cost of capital (“WACC”) using the Capital Asset Pricing Model (“CAPM”). Separate discount rates were estimated for DL (11.3%) and DPL (12%), with inputs to the CAPM (beta, capital structure and tax rates) based on a set of similar comparables to those used for each region in the market approach. • The WACC included an adjustment for country risk premium (“CRP”) which was derived from KPMG internal data sources and other external sources believed to be reliable. The CRP was weighted based on the countries in which the Units operate, using relative EBITDA. • The valuation reflects market and economic conditions at the valuation date, 31 March 2020, including the effects of Covid - 19 recognising that the comparable company market multiples are based on share prices on that date, at which point investors had incorporated the effects of Covid - 19. In addition, the equity risk premium (“ERP”) used in the cost of capital calculation reflects a recent increase in KPMG’s standard ERP estimate to reflect the effects of Covid - 19. Other • An additional adjustment of 7.5% (high scenario) and 10% (low scenario) was made to the resultant valuation of DPL (and in the assessment as to whether value would likely accrue to DGL1 from DL), to allow for expected market perception that a sale of the Units would be viewed by prospective purchasers as distressed sales, as DGL1 would be in an insolvency process and a liquidator may not have access to key management and support services for the duration of a sale process. • Certain non - operating items were added to the enterprise value of the Units, primarily for cash balances and debt like items of the Units like deferred tax liabilities and asset retirement obligations. DL’s non - operating assets / liabilities included potential recoveries under a lawsuit against Orange for damages caused by alleged anti - competitive behaviour in the French West Indies market. DL has been awarded €346m including interest (50% of which would accrue to the third party former owner) but this is subject to appeals by both Orange and Digicel (the latter in relation to the calculation of interest on the underlying damages). This has been used to estimate a high post tax outcome of this suit at c. $124m. Given the risk of Orange winning the appeal, and uncertainty in timing of a resolution, a low outcome of $0 has been assumed. • The high / low analysis used the greater and lower outcomes of a representative spread of market based and income based valuations adjusted in each case for high and low estimates of recovery from non operating assets to determine a high/low range of estimated recovery amounts. © 2020 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 136 14

 

 

DR A F T Key Assumptions DGL1 - Liquidation Analysis Report Valuation of interest in Pana m an i an Operations via DHCAL • DHCAL is the holding company for the Panamanian operating company, Digicel Panama S.A (“Panama”). Panama has historically been loss making and substantially funded by way of loans from DGL1. We have concluded that in the event of a liquidation of DGL1 that Panama would not be operated as a going concern. • We understand and have based our recovery assessment on the understanding that the loan agreements between DGL1 as lender and DCAGL and DHCAL as intergroup borrowers in relation to the Panamanian operations, that DGL1’s shareholder loan benefits from secured status in a liquidation of Panama. • Recovery estimates were applied against items on the Digicel Panama S.A.’s balance sheet at the insolvency date to determine the likely recovery back to DGL1 from DCAGL. • The net estimated recovery to DGL1 assumes preferential claims in relation to unpaid taxes and employee entitlements of c.$4.2m. • We have also assumed that all other creditors in Panama’s insolvency after the secured creditor would rank pari passu. CSI and sha r eho l der loan • We have assumed a range of recovery on DGL1’s investment in CSI ranging from Zero (reflecting currently anticipated challenging cash flow circumstances being experienced by CSI) to $7 million (reflecting 50% of an informal indication of potential pricing in a previously considered transaction). © 2020 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 137 15

 

 

DR A F T Key Assumptions DGL1 - Liquidation Analysis Report Prepayments We understand that prepayments consist of: - $250k paid to ratings agencies which will not be recoverable; and - $67k in relation to insurance which will not be recoverable. I n t e r co m pany Receivables DGL1 has the following intercompany receivables: • Digicel Group Limited of c.$8.8m • Digicel Group Two Limited of c.$161m • Digicel Holdings (Bermuda) Limited of c.$17.6k Our liquidation analysis indicates that there would be no recovery from Digicel Group Limited (Bermuda) or Digicel Group Two Limited as these entities have no material assets aside from their direct and/or indirect interests in DGL1 and would be liquidated. We expect that the amount of $17.6k from Digicel Holdings (Bermuda) Limited will be recovered in full. Other R ece i v ab l es Other receivables consist of amounts due in relation to consultancy and we have assumed that these receivables are not recoverable. Cash Management have confirmed that the cash balances are not restricted and as such we have assumed that these balances would be available to a liquidator. © 2020 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 138 16

 

 

DR A F T Key Assumptions DGl1 - Liquidation Analysis Report Liquidators’ fees, expenses and disbursements In assessing the projected costs of DGL1’s liquidation, consideration has been given to: • significant oversight by the liquidator over a realisation period of up to three years; • engaging a Corporate Finance specialist or Investment Bank to oversee the sale process in relation to DPL; • engaging legal counsel to advise the Liquidator in relation to asset recoveries, the sale of DPL and general legal matters, and • the possible need to replace management teams or appointing new directors to the board to govern the operations of the business for the duration of any sale process. DGL1 Noteholders • We have assumed that DGL1 Noteholders would rank ahead of all unsecured creditors by reason of the liens and pledges on DGL1’s assets. DPL Intercompany Loan • We have assumed the DPL intercompany loan is an unsecured claim. Other Intercompany • We have assumed the intercompany payable is an unsecured claim Payables • We have assumed that all Payables are unsecured claims. © 2020 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 139 17

 

 

kpmg.ie The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. © 2020 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. 140

 

 

 

APPENDIX 5

TENDER OFFER MEMORANDUM

 

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Offer by Digicel Group 0.5 Limited (“we”) to Purchase Any and All Outstanding 8.250% Senior Notes due 2022 Issued by Digicel Group Two Limited

Offer to Purchase Any and All Outstanding 9.125% Senior Cash Pay/PIK Notes due 2024 Issued by Digicel Group Two Limited

Offer to Purchase Any and All Outstanding 8.250% Senior Notes due 2022 Issued by Digicel Group One Limited

and
Solicitation of Consents and Waivers

Early Tender Date: 5:00 p.m., New York City time, April 14, 2020, unless extended

Expiration Date: 11:59 p.m., New York City time, April 28, 2020, unless extended

 

Upon the terms and subject to the conditions set forth in this offering memorandum and consent and waiver solicitation statement (as it may be supplemented and amended from time to time, the “offering memorandum”) and the related letter of transmittal (the “letter of transmittal”), we are making three separate offers to purchase (each, a “Tender Offer” and, collectively, the “Tender Offers”): (i) any and all of the outstanding 8.250% notes due 2022 issued by Digicel Group Two Limited (referred to herein as “Digicel Group Two Limited” or “DGL2”), validly tendered (and not validly withdrawn) and accepted for exchange by us for perpetual convertible notes and new notes, in each case to be issued by Digicel Group 0.5 Limited (referred to herein as “Digicel Group 0.5 Limited” or “DGL0.5”), a newly created direct subsidiary of Digicel Group One Limited (referred to herein as “Digicel Group One Limited” or “DGL1”) (the “DGL2 2022 Tender Offer”), (ii) any and all of the outstanding 9.125% cash pay/PIK notes due 2024 issued by Digicel Group Two Limited validly tendered (and not validly withdrawn) and accepted for exchange by us for perpetual convertible notes and new notes, in each case to be issued by Digicel Group 0.5 Limited (the “DGL2 2024 Tender Offer” and, together with the DGL2 2022 Tender Offer, the “DGL2 Tender Offers”) and (iii) any and all of the outstanding 8.250% notes due 2022 issued by Digicel Group One Limited, validly tendered (and not validly withdrawn) and accepted for exchange by us for new notes to be issued by Digicel Group 0.5 Limited (the “DGL1 Tender Offer”), as described in, and for the consideration summarized in, the table below.

 

We are also soliciting (i) consents from Eligible Holders (as defined herein) of the Existing Notes (as defined herein) to effect the Proposed Amendments (as defined herein) to the Existing Indentures (as defined herein) (the “Consent Solicitations”), (ii) waivers from Eligible Holders in respect of (x) any default or event of default as defined in Section 6.01 of each Existing Indenture that might occur as a result of (I) an Existing Notes Issuer (as defined herein) electing to pursue a Scheme (as defined herein) with respect to any series of Existing Notes or (II) Digicel Limited electing to pursue to any DL Scheme (as defined herein) (the “Scheme Default Waiver”), (y) the obligation to furnish financial statements under Section 4.21 of each Existing Indenture for a period of 90 days following the applicable deadlines set forth therein (the “Reports Waiver”) and (z) (I) the right to receive interest due (a) in the case of the Existing DGL1 Notes (as defined herein) and Existing DGL2 2022 Notes (as defined herein), on March 30, 2020, and (b) in the case of the Existing DGL2 2024 Notes (as defined herein), on April 1, 2020, and (II) any claim that may be brought by such consenting Eligible Holder pursuant to the relevant Existing Indenture in respect of such unpaid interest (the “Interest Payment Waiver” and, together with the Scheme Default Waiver and the Reports Waiver, the “Waivers”) (the “Waiver Solicitations”) and (iii) consents from Eligible Holders of the Existing Notes to effect the Proposed Event of Default Amendment (as defined herein) to the Existing Indentures (the “Interest Payment Consent Solicitation” and, together with Waiver Solicitations and the Consent Solicitations, the “Solicitations”), in each case upon the terms and subject to the conditions set forth in this offering memorandum and the related letter of transmittal. Eligible Holders may not deliver a consent or waiver, as applicable, in the Solicitations without tendering the Existing Notes of the applicable series in the applicable Tender Offer. For the avoidance of doubt, we are not offering any consideration for delivery of consents or waivers in connection with the Solicitations. If an Eligible Holder validly tenders and does not validly withdraw its Existing Notes of any series in a Tender Offer, such Eligible Holder will be deemed to:

 

·deliver its consent, with respect to the principal amount of such tendered Existing Notes, to the Proposed Amendments to the applicable Existing Indentures, which include, but are not limited to, eliminating substantially all of the covenants, restrictive provisions, events of default and, with respect to the Existing DGL1 Notes Indenture (as defined herein), collateral and security;

 

·deliver its consent to the Proposed Event of Default Amendment to the applicable Existing Indentures, which would amend Section 6.01(a)(i) of each Existing Indenture to extend the grace period set forth therein from 30 to 180 days;

 

·deliver its Scheme Default Waiver, Reports Waiver and Interest Payment Waiver; and

 

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·automatically and unconditionally deliver instructions for the Tender Agent (as defined herein) (the “Attorney-in-Fact”), effective immediately, (a) to act as its true and lawful agent, attorney-in-fact and proxy with respect to the applicable series of Existing Notes, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), among other things, to take all steps necessary and execute all documentation necessary to cause such tendered Existing Notes to be assigned, transferred and exchanged and (b) in such capacity as true and lawful agent, attorney-in-fact and proxy, to take all steps necessary and execute all documentation necessary to irrevocably vote in favor (including, if required, attending a meeting and voting on behalf such tendered Existing Notes) of a Scheme with respect to such Existing Notes (the “Instructions”), with such Instructions to be automatically delivered to the Tender Agent by the Eligible Holder’s commercial bank, broker, dealer, trust company or other nominee immediately following the tender of such Existing Notes through ATOP (as defined herein) using the relevant Agent/Attorney-in-Fact and Proxy Nominee Instruction Form attached hereto as Exhibit A (the “Nominee Instruction Form”). For the avoidance of doubt, in connection with the tender of Existing Notes by an Eligible Holder, the submission of the ATOP instruction without the submission by such Eligible Holder’s commercial bank, broker, dealer, trust company or other nominee of the corresponding Nominee Instruction Form shall not be sufficient to grant the Instructions. In order for a tender of Existing Notes to be valid, a corresponding Nominee Instruction Form must be submitted.

 

If we achieve the 75% Condition (as defined herein) with respect to a series of Existing Notes, the applicable Existing Notes Issuer reserves the right to promote a scheme of arrangement pursuant to section 99 of the Companies Act 1981 of Bermuda in respect of such series of Existing Notes providing substantially the same or better economic terms (as determined by the Attorney-in-Fact in its discretion acting in good faith) to such series of Existing Notes than those terms set forth herein (each, a “Scheme”). If an Existing Notes Issuer promotes a Scheme with respect to a series of Existing Notes, the applicable Expiration Date will be extended until the Scheme is consummated.

 

In the event that a Scheme with respect to the Existing DGL1 Notes (a “DGL1 Scheme”) is consummated and no Scheme with respect to the Existing DGL2 Notes (a “DGL2 Scheme”) is consummated, DGL2 is expected to be placed into liquidation. If this occurs, Eligible Holders of the Existing DGL2 Notes that do not tender their Existing DGL2 Notes would be entitled to receive interest due on March 30, 2020 or April 1, 2020, as applicable, but may not be able to recover such interest or any additional interest or principal as a result of such liquidation. See “Risk Factors—Risks Relating to the Non-Tendering Holders of the Existing Notes—If you are an Eligible Holder of Existing Notes and you do not tender your Existing Notes and the Tender Offers are consummated, you may ultimately find that the Existing Notes Issuers could be unable to repay or refinance such non-tendered Existing Notes.”

 

Existing Notes

to be Tendered

CUSIP / ISIN Numbers 

Aggregate Principal Amount Outstanding(1) 

Tender Consideration(2)(3) 

Early Tender Premium(2)

Total Tender Consideration (2)(3)(4) 

      Convertible Notes New Notes New Notes Convertible Notes New Notes

8.250% Senior Notes due 2022 of DGL2 (the “Existing DGL2 2022 Notes”)

 

25382FAB7 / US25382FAB76;
G27639AB2 / USG27639AB27
$937,149,000 $53 principal amount of 7.00% PIK Perpetual Convertible Notes issued by DGL0.5 (the “Convertible Notes”) $295 principal amount of 5.0% Cash Pay/3.0% PIK Notes due 2025 issued by DGL0.5 (the “New DGL0.5 Unsecured Notes”) $25 principal amount of the New DGL0.5 Unsecured Notes $53 principal amount of Convertible Notes $320 principal amount of the New DGL0.5 Unsecured Notes

9.125% Senior Cash Pay/PIK Notes due 2024 of DGL2 (the “Existing DGL2 2024 Notes”)

 

25382FAA9 / US25382FAA93;
G27639AA4 / USG27639AA44
$993,015,769 $151 principal amount of Convertible Notes $76 principal amount of the New DGL0.5 Unsecured Notes $25 principal amount of the New DGL0.5 Unsecured Notes $151 principal amount of Convertible Notes $101 principal amount of the New DGL0.5 Unsecured Notes
8.250 % Senior Notes due 2022 of DGL1 (the “Existing DGL1 Notes”) 25382DAA4 / US25382DAA46;
G27634AA5 / USG27634AA56
$1,000,000,000 -- $891 principal amount of 8.0% Cash Pay/2.0% PIK Notes due 2024 issued by DGL0.5 (the “New DGL0.5 Secured Notes”) $50 principal amount of the New DGL0.5 Secured Notes -- $941 principal amount of the New DGL0.5 Secured Notes

 

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(1)As of the date of this offering memorandum.

 

(2)For each $1,000 principal amount of the Existing DGL2 2022 Notes, the Existing DGL2 2024 Notes (together with the Existing DGL2 2022 Notes, the “Existing DGL2 Notes”) and the Existing DGL1 Notes (together with the Existing DGL2 Notes, the “Existing Notes”), as applicable.

 

(3)No payment will be made in respect of accrued interest on the Existing Notes accepted in the Tender Offers. Interest will accrue on each series of New Notes (as defined herein) (other than the New DGL0.5 Secured Notes) from the Settlement Date. Interest on the New DGL0.5 Secured Notes will accrue from March 30, 2020.

 

(4)Includes the Early Tender Premium.

 

Each Tender Offer is conditioned upon a Minimum Participation Condition (as defined herein), the Consent Condition (as defined herein) and the Concurrent Transaction Condition (as defined herein). See “Description of the Tender Offers, Solicitations and Schemes—Conditions to the Tender Offers and Solicitations.” Each Tender Offer is a separate offer and, subject to applicable law, may be amended, extended, terminated or withdrawn, either as a whole, or with respect to a series of the Existing Notes, at any time and for any reason, including if any of the conditions described above are not satisfied or waived by the Expiration Date (or the Early Settlement Date, as the case may be). Waivers and the Proposed Event of Default Amendment will become effective, with respect to an Existing Indenture, upon the receipt of Waivers and consents to the Proposed Event of Default Amendment from Eligible Holders holding the majority of the outstanding aggregate principal amount of the applicable series of Existing Notes, even if we do not consummate the applicable Tender Offer or commence a Scheme with respect to such series of Existing Notes, provided that the Reports Waiver, Interest Payment Waiver and Proposed Event of Default Amendment will cease to be effective if the applicable Tender Offer is terminated or withdrawn without the commencement of a Scheme with respect to such Existing Notes or if the applicable Existing Notes Issuer commences but does not consummate a Scheme with respect such Existing Notes. After the applicable Withdrawal Deadline and before the applicable Expiration Date, upon receipt of valid consents sufficient to effect the Proposed Amendments with respect to Existing Notes of a series, the applicable Existing Notes Issuer and the trustee under the applicable Existing Indenture will execute and deliver a supplemental indenture relating to the Proposed Amendments with respect to the applicable Existing Notes Indenture immediately giving effect to such Proposed Amendments, provided that such Proposed Amendments will cease to be effective if the applicable Tender Offer is terminated or withdrawn without the commencement of a Scheme with respect to the applicable series of Existing Notes or if the applicable Existing Notes Issuer commences but does not consummate a Scheme with respect to the applicable series of Existing Notes.

 

If we receive valid tenders not validly withdrawn from Eligible Holders holding at least 75% of the outstanding principal amount of such series of Existing Notes (the “75% Condition”), the applicable Existing Notes Issuer reserves the right to enter into a Scheme with respect to such series of Existing Notes rather than consummate the applicable Tender Offer.

 

Pursuant to a Lockup and Support Agreement dated April 1, 2020 (the “Support Agreement”), certain holders of $491 million aggregate principal amount of Existing DGL1 Notes, $475 million aggregate principal amount of Existing DGL2 2022 Notes and $154 million aggregate principal amount of Existing DGL2 2024 Notes have committed to tender their Existing Notes in the applicable Tender Offer prior to the applicable Early Tender Date.

 

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Each Tender Offer and Solicitation will expire at 11:59 p.m., New York City time, on April 28, 2020, unless extended (such date and time with respect to a Tender Offer and Solicitation, as the same may be extended for such Tender Offer and Solicitation, the “Expiration Date”). To be eligible to receive the applicable Total Tender Consideration (as defined herein), Eligible Holders (as defined herein) must validly tender their Existing Notes at or prior to 5:00 p.m., New York City time, on April 14, 2020, unless extended (such date and time with respect to a Tender Offer, as the same may be extended for such Tender Offer, the “Early Tender Date”). Tenders of the Existing Notes may not be withdrawn after 5:00 p.m., New York City time, on April 14, 2020, unless extended (such date and time with respect to a Tender Offer, as the same may be extended for such Tender Offer, the “Withdrawal Deadline”), except in certain limited circumstances as set forth herein. Eligible Holders may not deliver a consent or a Waiver in a Solicitation without tendering the Existing Notes of the applicable series in a Tender Offer. If an Eligible Holder tenders the Existing Notes in a Tender Offer, such Eligible Holder will be deemed to deliver, with respect to the principal amount of such tendered Existing Notes, (i) its consent to the Proposed Amendments and Proposed Event of Default Amendment, (ii) the Instructions and (iii) the Waivers.

 

The New DGL0.5 Secured Notes will be issued by Digicel Group 0.5 Limited and will mature on April 1, 2024. Each New DGL0.5 Secured Note will bear cash interest at the rate per annum equal to 8.0% semi-annually from March 30, 2020. In addition, for each period, interest in addition to the cash interest shall be paid by increasing the principal of the outstanding New DGL0.5 Secured Notes or by issuing additional New DGL0.5 Secured Notes (rounded up to the nearest $1.00) (“PIK Interest”). PIK Interest on the New DGL0.5 Secured Notes will accrue at a rate of 2.0% per annum beginning on the Settlement Date. We may, at our option, pay 10.0% PIK Interest with no cash interest on the New DGL0.5 Secured Notes for the first two interest payments following the Settlement Date. Interest will be payable on each New DGL0.5 Secured Note on April 1 and October 1 of each year. The New DGL0.5 Secured Notes will be guaranteed by Digicel Pacific Limited, our direct wholly owned subsidiary, and will be secured by pledges of certain of our assets.

 

The New DGL0.5 Unsecured Notes will be issued by Digicel Group 0.5 Limited and will mature on April 1, 2025. Each New DGL0.5 Unsecured Note will bear interest at the rate per annum equal to 5.0% semi-annually from the Settlement Date. PIK Interest on the New DGL0.5 Unsecured Notes will accrue at a rate of 3.0% per annum beginning on the Settlement Date. We may, at our option, pay 8.0% PIK Interest with no cash interest on the New DGL0.5 Unsecured Notes for the first two interest payments following the Settlement Date. Interest will be payable on each New DGL0.5 Unsecured Note on April 1 and October 1 of each year.

 

The Convertible Notes will pay interest at a rate of 7.00% per annum, payable solely in kind semi-annually from the Settlement Date. Interest will be paid by increasing the principal amount of the outstanding Convertible Notes or by issuing Convertible Notes (rounded up to the nearest $1.00) (“Convertible Note PIK Interest”), having the same terms and conditions as the Convertible Notes. Convertible Note PIK Interest will be payable on each Convertible Note on April 1 and October 1 of each year commencing on October 1, 2020. Holders of the Convertible Notes may not convert their Convertible Notes prior to June 1, 2023. On and after June 1, 2023, holders of the Convertible Notes that have not been redeemed, at their option, may, at any time and from time to time, convert some or all of their outstanding Convertible Notes at an initial conversion rate per $1,000 principal amount of the Convertible Notes equal to a number of common shares representing 49% of the fully diluted common equity of DGL0.5 as of the Settlement Date after giving effect to the Founder Equity Contribution (as defined below) divided by the number of Convertible Notes (in principal amounts of $1,000) initially issued on the Settlement Date (such number of common shares, rounded down to the nearest 1/10,000th of a share, the “share allocation”) (subject to adjustment in certain events). Subject to certain conditions, DGL0.5 may redeem some or all of the Convertible Notes at any time after the issue date at a redemption price as set forth in “Description of the Convertible Notes—Optional Redemption.” The redemption price will be paid solely in cash. DGL0.5’s payment obligation under the Convertible Notes will be unsecured and will rank junior and be subordinated in right of payment to all of DGL0.5’s Senior Indebtedness on the terms set forth in the Convertible Note Indenture.

 

The New Notes have not been, and will not be, registered with the Securities and Exchange Commission (the “SEC”) under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any other jurisdiction. The New Notes may not be offered or sold in the United States (the “U.S.”) or to any U.S. persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. See “Transfer Restrictions.” Only persons holding Existing Notes who certify that they are (i) “qualified institutional buyers” (“QIBs”) within the meaning of Rule 144A under the Securities Act (“Rule 144A”) or (ii) persons outside of the United States that are not “U.S. persons” within the meaning of Regulation S under the Securities Act (“Regulation S”) and that are not acquiring the New Notes for the account or benefit of a U.S. person are authorized to receive and review this offering memorandum and participate in the Tender Offers (such persons, “Eligible Holders”). References in this offering memorandum to “holders”

 

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are to “Eligible Holders” unless otherwise stated or the context otherwise requires. We will make alternative arrangements available to other holders to provide them with reasonably equitable value for their consents.

 

Unless otherwise indicated or the context otherwise requires, all references in this offering memorandum to “Digicel” or the “Company” refer to Digicel Group Limited and its subsidiaries, including Digicel Group 0.5 Limited, Digicel Group One Limited and Digicel Group Two Limited, and all references to “we,” “our,” “ours,” “us” or similar terms refer to Digicel Group 0.5 Limited. As used in this offering memorandum, the terms “Digicel Group Limited” or “DGL3” refer solely to Digicel Group Limited and not its subsidiaries. “Digicel Group 0.5 Limited” or “DGL0.5” refers specifically to Digicel Group 0.5 Limited and not its subsidiaries. “Digicel Group One Limited” or “DGL1” refers specifically to Digicel Group One Limited and not its subsidiaries. “Digicel Group Two Limited” or “DGL2” refers specifically to Digicel Group Two Limited and not its subsidiaries. Unless the context otherwise requires, we refer to entities herein according to their names following the Reorganization Transactions (as defined herein) described in this offering memorandum. We refer to each of Digicel Group Two Limited and Digicel Group One Limited as an “Existing Notes Issuer” and together as the “Existing Notes Issuers.”

 

See “Risk Factors” beginning on page 49 to read about important factors you should consider before you decide to participate in the Tender Offers and Solicitations.

 

Dealer Manager and Solicitation Agent 

Citigroup

 

The date of this offering memorandum is April 1, 2020.

 

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We are offering (i) Eligible Holders of Existing DGL2 2022 Notes the opportunity to exchange any and all of their Existing DGL2 2022 Notes for Convertible Notes and New DGL0.5 Unsecured Notes, (ii) Eligible Holders of Existing DGL2 2024 Notes the opportunity to exchange any and all of their Existing DGL2 2024 Notes for Convertible Notes and New DGL0.5 Unsecured Notes and (iii) Eligible Holders of Existing DGL1 Notes the opportunity to exchange any and all of their Existing DGL1 Notes for New DGL0.5 Secured Notes, upon the terms and subject to the conditions set forth in this offering memorandum and the related letter of transmittal. For each $1,000 principal amount of Existing Notes validly tendered at or before the applicable Early Tender Date and not validly withdrawn at or before the applicable Withdrawal Deadline, Eligible Holders will be eligible to receive the total tender consideration set out in the table on the cover page of this offering memorandum (the “Total Tender Consideration”), which includes the early tender premium set out in such table (the “Early Tender Premium”). For each $1,000 principal amount of Existing Notes validly tendered after the applicable Early Tender Date but at or before the applicable Expiration Date, Eligible Holders will be eligible to receive only the tender consideration set out in such table (the “Tender Consideration”).

 

To facilitate participation in the Tender Offers, the Existing Notes may be tendered in minimum denominations of $1.00 and integral multiples of $1.00 in excess thereof. This change in the denominations of the Existing Notes will be effective until settlement (or termination) of the Tender Offers.

 

The New Notes will only be issued in minimum denominations of $1.00 and integral multiples of $1.00 in excess thereof in the Tender Offers. If, pursuant to a Tender Offer, a tendering Eligible Holder would otherwise be entitled to receive a principal amount of New Notes that is not equal to $1.00 or an integral multiple of $1.00 in excess thereof, such principal amount will be rounded down to the nearest $1.00 or integral multiple of $1.00 in excess thereof, and such Eligible Holder will receive pursuant to the applicable Tender Offer this rounded principal amount of New Notes, and no additional cash will be paid in lieu of any principal amount of New Notes not received as a result of rounding down. No Eligible Holder may tender less than all of its Existing Notes in a Tender Offer.

 

Pursuant to the Consent Solicitations, we are also soliciting consents from holders of the Existing Notes, upon the terms and subject to the conditions set forth in this offering memorandum and the related letter of transmittal, to amend the indenture dated January 14, 2019, between Digicel Group Two Limited and Deutsche Bank Trust Company Americas, as trustee, pursuant to which the Existing DGL2 2022 Notes were issued (the “Existing DGL2 2022 Notes Indenture”), the indenture dated January 14, 2019, between Digicel Group Two Limited and Deutsche Bank Trust Company Americas, as trustee, pursuant to which the Existing DGL2 2024 Notes were issued (the “Existing DGL2 2024 Notes Indenture”) and the indenture dated January 14, 2019, between Digicel Group One Limited and Deutsche Bank Trust Company Americas, as trustee and collateral agent, pursuant to which the Existing DGL1 Notes were issued (the “Existing DGL1 Notes Indenture” and, together with the Existing DGL2 2022 Notes Indenture and the Existing DGL2 2024 Notes Indenture, the “Existing Indentures”). Eligible Holders may not deliver a consent in a Consent Solicitation without tendering the Existing Notes of the applicable series in the applicable Tender Offer. If an Eligible Holder tenders Existing Notes of any series in a Tender Offer, such Eligible Holder will be deemed to deliver its consent with respect to the principal amount of such tendered Existing Notes to the Proposed Amendments to the applicable Existing Indentures, which include eliminating certain of the covenants, restrictive provisions, events of default and, with respect to the Existing DGL1 Notes Indenture, collateral and security (the “Proposed Amendments”). After the applicable Withdrawal Deadline and before the applicable Expiration Date, upon receipt of valid consents sufficient to effect the Proposed Amendments with respect to Existing Notes of a series, the applicable Existing Notes Issuer and the trustee under the applicable Existing Indenture will execute and deliver a supplemental indenture relating to the Proposed Amendments with respect to the applicable Existing Notes Indenture immediately giving effect to such Proposed Amendments, provided that such Proposed Amendments will cease to be effective if the applicable Tender Offer is terminated or withdrawn without the commencement of a Scheme with respect to the applicable series of Existing Notes or if the applicable Existing Notes Issuer commences but does not consummate a Scheme with respect to the applicable series of Existing Notes. The Proposed Amendments to the Existing Indentures are described in this offering memorandum under “The Proposed Amendments and Waiver Solicitations.”

 

Pursuant to the Waiver Solicitations, we are also soliciting waivers from Eligible Holders pursuant to the terms of each Existing Indenture, in respect of (i) any default or event of default as defined in Section 6.01 of each Existing Indenture that might occur as a result of (I) an Existing Notes Issuer electing to pursue a Scheme with respect to any series of Existing Notes or (II) Digicel Limited electing to pursue to any DL Scheme, (ii) the obligation to furnish financial statements under Section 4.21 of each Existing Indenture for a period of 90 days following the applicable deadlines set forth therein and (iii) (I) the right to receive interest due (a) in the case of the Existing DGL1 Notes and Existing DGL2 2022 Notes, on March 30, 2020, and (b) in the case of the Existing DGL2 2024 Notes, on April 1, 2020, and (II) any claim that may be brought by such consenting Eligible Holder pursuant to the relevant Existing Indenture in respect of such unpaid interest.

 

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Pursuant to the Interest Payment Consent Solicitations, we are also soliciting consents from Eligible Holders pursuant to the terms of each Existing Indenture to amend Section 6.01(a)(i) in the Existing Indentures to extend the grace period set forth therein from 30 to 180 days (the “Proposed Event of Default Amendment”). Eligible Holders may not deliver a consent in an Interest Payment Consent Solicitation without tendering the Existing Notes of the applicable series in the applicable Tender Offer. The Proposed Event of Default Amendment to the Existing Indentures is described in this offering memorandum under “The Proposed Amendments and Waiver Solicitations.”

 

Waivers and the Proposed Event of Default Amendment will become effective, with respect to an Existing Indenture, upon the receipt of Waivers and consents to the Proposed Event of Default Amendment from Eligible Holders holding the majority of the outstanding aggregate principal amount of the applicable series of Existing Notes, even if we do not consummate the applicable Tender Offer or commence a Scheme with respect to such series of Existing Notes, provided that the Reports Waiver, Interest Payment Waiver and Proposed Event of Default Amendment will cease to be effective if the applicable Tender Offer is terminated or withdrawn without the commencement of a Scheme with respect to such Existing Notes or if the applicable Existing Notes Issuer commences but does not consummate a Scheme with respect such Existing Notes. If an Eligible Holder validly tenders and does not validly withdraw Existing Notes of any series in a Tender Offer, such Eligible Holder will be deemed, with respect to the principal amount of such tendered Existing Notes, to deliver the Waivers, to consent to the Proposed Event of Default Amendment and to automatically and unconditionally deliver Instructions with respect to the principal amount of such Existing Notes. If we achieve the 75% Condition with respect to a series of Existing Notes, the applicable Existing Notes Issuer reserves the right to enter into a Scheme with respect to such series of Existing Notes rather than consummate the applicable Tender Offer. However, we can provide no assurance that a Scheme, if commenced, can or will be completed. If the applicable Existing Notes Issuer decides to promote a Scheme with respect to a series of Existing Notes, it would not terminate the Tender Offer until the Scheme is consummated.

 

Each Tender Offer is being made independently of each other Tender Offer. Each Tender Offer is subject to the satisfaction or waiver of certain conditions set forth in this offering memorandum, including without limitation, (i) a minimum of $468.6 million in aggregate principal amount of Existing DGL2 2022 Notes in the case of the DGL2 2022 Tender Offer, a minimum of $496.6 million in aggregate principal amount of Existing DGL2 2024 Notes in the case of the DGL2 2024 Tender Offer and a minimum of $500.1 million in aggregate principal amount of Existing DGL1 Notes in the case of the DGL1 Tender Offer being validly tendered at or prior to the Expiration Date (or Early Settlement Date, as the case may be) and accepted in the applicable Tender Offer (each a “Minimum Participation Condition”), (ii) obtaining the requisite consents from holders representing a majority of the outstanding aggregate principal amount of each series of the applicable Existing Notes and the effectiveness and, substantially concurrently with settlement, entry into operation of the Proposed Amendments with respect to such series (the “Consent Condition”) and (iii) satisfying the Minimum Participation Condition with respect to each other Tender Offer (the “Concurrent Transaction Condition”). In the event that the 75% Condition is met with respect to the Existing DGL1 Notes, DGL1 may promote a DGL1 Scheme notwithstanding the fact that the Concurrent Transaction Condition is not met with respect to any of the DGL2 Tender Offers.

 

Subject to applicable law and as set forth herein, we expressly reserve the right, in our sole discretion, to extend or amend any Tender Offer in any respect, in each case without extending the Withdrawal Deadline or otherwise reinstating withdrawal rights, and to terminate any Tender Offer if any condition to such Tender Offer is not satisfied or waived by the Expiration Date. We may, at any time prior to the applicable Expiration Date (or Early Settlement Date, as the case may be), waive any condition to a Tender Offer in our sole discretion (including the Minimum Participation Condition) without extending the applicable Withdrawal Deadline or otherwise reinstating withdrawal rights, subject to applicable law. If we waive or amend any such condition, we do not expect to extend the applicable Withdrawal Deadline or otherwise reinstate withdrawal rights, subject to applicable law. Subject to applicable law, we may terminate a Tender Offer if any of the conditions described under “Description of the Tender Offers, Solicitations and Schemes—Conditions to the Tender Offers and Solicitations” are not satisfied or waived by the applicable Expiration Date (or Early Settlement Date, as the case may be).

 

In order to tender Existing Notes pursuant to a Tender Offer, Eligible Holders will be required, at the time of such tender, to certify to us that, (i) in the case of a DGL2 Tender Offer, they (A) have validly tendered and not validly withdrawn any and all Existing DGL2 Notes and Existing DL Notes beneficially owned by them pursuant to the DGL2 Tender Offers and the DL Tender Offers, respectively, and (B) will not validly withdraw any such tender of any Existing DGL2 Notes and Existing DL Notes unless they validly withdraw their tender of all Existing DGL2 Notes beneficially owned by them, (ii) in the case of the DGL1 Tender Offer, they (A) have validly tendered and not validly withdrawn any and all Existing DGL1 Notes beneficially owned by them pursuant to the DGL1 Tender Offer and (B) will not validly withdraw any such tender of any Existing DGL1 Notes unless they validly withdraw their tender of all Existing DGL1 Notes, and (iii) they shall not take, encourage, assist or support (or procure that any other person take, encourage, assist or support) any action which would, or would reasonably be expected to, breach,

 

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be inconsistent with, delay, impede or prevent the implementation or consummation of the applicable Tender Offer or Scheme. See “Summary—Recent Developments—DL Tender Offers” for a description of the Existing DL Notes and DL Tender Offers. To validly tender Existing Notes, such Existing Notes must be actually transferred (a) by delivering certificates representing such Existing Notes to the Tender Agent or (b) electronically, pursuant to the procedures for book-entry transfer described herein via The Depository Trust Company (“DTC”) (using the Participant Tender Offer Program (“PTOP”) function in DTC’s Automated Tender Offer Program (“ATOP”) system). Delivery of a claim or liability letter with respect to any Existing Notes that has been issued to another person will not qualify as a valid tender of such Existing Notes. Any tender of Existing Notes that does not comply with these provisions could result in the rejection of all tenders of all Existing Notes tendered by such Eligible Holder pursuant to the Tender Offers. We reserve the absolute right to waive any defects or irregularities with respect to any such attestation or tender, subject to applicable law. For further details, see “Description of the Tender Offers, Solicitations and Schemes—Certification of Participation in the Tender Offers.”

 

Tenders of Existing Notes pursuant to a Tender Offer may be validly withdrawn at any time prior to the Withdrawal Deadline with respect to such Tender Offer but not thereafter. Existing Notes may only be withdrawn from a Tender Offer if the applicable Eligible Holder also validly withdraws its tender of all other Existing Notes tendered by such Eligible Holder pursuant to the Tender Offers.

 

A valid withdrawal of tendered Existing Notes will also constitute the revocation of the related consents to the Proposed Amendments and the Proposed Event of Default Amendment to the applicable Existing Indenture, the Instructions and the Waivers. The consents to the Proposed Amendments and the Proposed Event of Default Amendment, the Instructions and the Waivers may only be revoked by validly withdrawing the tendered Existing Notes prior to the applicable Withdrawal Deadline. Tenders, consents, Instructions and Waivers submitted in a Tender Offer after the applicable Withdrawal Deadline will be irrevocable except in the limited circumstances where additional withdrawal rights are required by law. Waivers and the Proposed Event of Default Amendment will become effective, with respect to an Existing Indenture, upon the receipt of Waivers and consents to the Proposed Event of Default Amendment from Eligible Holders holding the majority of the outstanding aggregate principal amount of the applicable series of Existing Notes, even if we do not consummate the applicable Tender Offer or commence a Scheme with respect to such series of Existing Notes, provided that the Reports Waiver, Interest Payment Waiver and Proposed Event of Default Amendment will cease to be effective if the applicable Tender Offer is terminated or withdrawn without the commencement of a Scheme with respect to such Existing Notes or if the applicable Existing Notes Issuer commences but does not consummate a Scheme with respect such Existing Notes.

 

Upon the terms and subject to the conditions of a Tender Offer, the settlement date for a Tender Offer will occur promptly after the applicable Expiration Date (the “Final Settlement Date”). We may elect, in our sole discretion, to settle such Tender Offer for the Existing Notes of the applicable series validly tendered (and not validly withdrawn) prior to the Early Tender Date for such Tender Offer at any time after the applicable Early Tender Date and prior to the applicable Expiration Date (the “Early Settlement Date”). Such Early Settlement Date will be determined at our option and, if we elect to have an Early Settlement Date, subject to all conditions of the applicable Tender Offer having been satisfied or waived by us. We sometimes refer to the Early Settlement Date and the Final Settlement Date of a Tender Offer as the “Settlement Date.” If the applicable Existing Notes Issuer elects to commence a Scheme with respect to a series of Existing Notes, the Settlement Date will be the date on which the Scheme becomes effective.

 

There is currently no market for the New Notes. Accordingly, we cannot assure you that any active trading market for the New Notes will develop or be maintained. If you do not tender your Existing Notes or if you tender Existing Notes that are not accepted for exchange, they will remain outstanding. If we consummate the Tender Offers, the applicable trading market for the Existing Notes may be significantly more limited and the Existing Notes will be structurally subordinated to the New Notes. For a discussion of this and other risks, see “Risk Factors.”

 

From time to time after completion of the Tender Offers, we and our affiliates may purchase additional outstanding Existing Notes in the open market, in privately negotiated transactions, through tender offers, exchange offers or otherwise, or we may redeem Existing Notes that are able to be redeemed, pursuant to their terms. Any future purchases, exchanges or redemptions may be on the same terms or on terms that are more or less favorable to holders of Existing Notes than the terms of the Tender Offers. Any future purchases, exchanges or redemptions by us and our affiliates will depend on various factors existing at that time. There can be no assurance as to which, if any, of these alternatives (or combinations thereof) we and our affiliates may choose to pursue in the future.

 

All of the Existing Notes are held, and all of the New Notes are expected to be delivered, in book entry form through the facilities of DTC and its participants. To exchange your Existing Notes for New Notes, you must

 

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instruct your commercial bank, broker, dealer, trust company or other nominee to further instruct the DTC participant through which your Existing Notes are held to tender your Existing Notes to DTC through the DTC ATOP by the Expiration Date to receive the Tender Consideration. See “Description of the Tender Offers, Solicitations and Schemes.”

 

NONE OF DGL0.5, THE DEALER MANAGER (AS DEFINED HEREIN), THE TRUSTEE WITH RESPECT TO EACH SERIES OF EXISTING NOTES AND NEW NOTES, THE TENDER AGENT (AS DEFINED HEREIN) OR THE INFORMATION AGENT (AS DEFINED HEREIN), THE COLLATERAL AGENT WITH RESPECT TO THE EXISTING DGL1 NOTES OR ANY AFFILIATE OF ANY OF THEM, MAKES ANY RECOMMENDATION AS TO WHETHER ELIGIBLE HOLDERS OF EXISTING NOTES SHOULD TENDER THEIR EXISTING NOTES FOR THE NEW NOTES IN RESPONSE TO THE TENDER OFFERS, CONSENT TO THE PROPOSED AMENDMENTS TO THE EXISTING INDENTURES AND DELIVER THE WAIVERS OR INSTRUCTIONS.

 

 

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IMPORTANT INFORMATION

 

This offering memorandum is confidential. This offering memorandum has been prepared solely for use in connection with the Tender Offers and Solicitations described in this offering memorandum and is only available to investors who have certified that they are Eligible Holders for the purposes of the Tender Offers and Solicitations. Eligible Holders are authorized to use this offering memorandum solely for the purpose of considering the tender of Existing Notes pursuant to the Tender Offers and Solicitations. This offering memorandum is personal to each Eligible Holder and does not constitute an offer to any other person or to the public generally to subscribe for or otherwise acquire securities. Distribution of this offering memorandum to any person other than an Eligible Holder and any person retained to advise such Eligible Holder with respect to its investment decision is unauthorized, and any disclosure of any of its contents, without our prior written consent, is prohibited. Each Eligible Holder, by accepting delivery of this offering memorandum, agrees to the foregoing and to make no photocopies of this offering memorandum.

 

Only registered holders are entitled to tender Existing Notes. A beneficial owner whose Existing Notes are registered in the name of a custodian must contact such custodian if such beneficial owner desires to tender Existing Notes so registered. Beneficial owners should be aware that their broker, dealer, commercial bank, trust company or other nominee or custodian may establish its own earlier deadlines for participation in the Tender Offers and Solicitations. Accordingly, beneficial owners wishing to participate in the Tender Offers and Solicitations should contact their broker, dealer, commercial bank, trust company or other nominee or custodian as soon as possible in order to determine the times by which such beneficial owner must take action in order to participate in the Tender Offers. See “Description of the Tender Offers, Solicitations and Schemes—Procedures for Tendering.”

 

We have engaged Citigroup Global Markets Inc. to act as the dealer manager and the solicitation agent (the “Dealer Manager”) for the Tender Offers and Solicitations. We have also engaged Epiq Corporate Restructuring, LLC to act as the tender agent (the “Tender Agent”) and the information agent (the “Information Agent”) for the Tender Offers.

 

Any questions or requests for assistance relating to the terms and conditions of the Tender Offers and Solicitations may be directed to the Dealer Manager at the address and telephone numbers on the back cover of this offering memorandum. Questions concerning tender procedures and requests for additional copies of this offering memorandum and the letter of transmittal may be directed to the Information Agent at its address and telephone number on the back cover of this offering memorandum. Beneficial owners of the Existing Notes should also contact their nominees or custodians for assistance regarding the Tender Offers and Solicitations.

 

There are no guaranteed delivery provisions provided for in conjunction with the Tender Offers under the terms of this offering memorandum and the letter of transmittal. Tendering holders must tender their Existing Notes in accordance with the procedures set forth under “Description of the Tender Offers, Solicitations and Schemes—Procedures for Tendering.”

 

We have not, and the Dealer Manager has not, authorized anyone to provide you with any information other than that contained in this offering memorandum or to which we have referred to you. We and the Dealer Manager take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We are not, and the Dealer Manager is not, making an offer of these securities in any jurisdiction where the offer is not permitted. You should not assume that the information contained in this offering memorandum is accurate as of any date other than the date on the front of this offering memorandum.

 

The Dealer Manager makes no representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this offering memorandum. Nothing contained in this offering memorandum is, or should be relied upon as, a promise or representation by the Dealer Manager as to the past or future. We have furnished the information contained in this offering memorandum. The Dealer Manager assumes no responsibility for the accuracy or completeness of any such information.

 

This offering memorandum contains summaries believed to be accurate with respect to certain documents, but reference is made to the actual documents for complete information. All such summaries are qualified in their entirety by such reference. Copies of documents referred to herein will be made available to prospective investors upon request to us or the Dealer Manager.

 

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In making any investment decision, prospective investors must rely on their own examination of us and the terms of the offering, including the merits and risks involved. Prospective investors should not construe anything in this offering memorandum, as legal, business or tax advice. Each prospective investor should consult its own advisors as needed to make its investment decision and to determine whether it is legally permitted to purchase the securities under applicable legal investment or similar laws or regulations.

 

Neither the Securities and Exchange Commission (the “SEC”), any state securities commission nor any other regulatory authority has approved or disapproved the securities, nor have any of the foregoing authorities passed upon or endorsed the merits of the Tender Offers, the Solicitations or the accuracy or adequacy of this offering memorandum. Any representation to the contrary is a criminal offense.

 

The New Notes are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the U.S. Securities Act and the applicable securities laws of any state or other jurisdiction pursuant to registration or exemption from registration. As a prospective investor, you should be aware that you may be required to bear the financial risks of this investment for an indefinite period of time. Please refer to the section in this offering memorandum entitled “Transfer Restrictions.”

 

Each Eligible Holder must comply with all applicable laws and regulations in force in any jurisdiction in which it purchases, offers or sells notes or possesses or distributes this offering memorandum and must obtain any consent, approval or permission required by it for the purchase, offer or sale by it of notes under the laws and regulations in force in any jurisdiction to which it is subject or in which it makes such purchases, offers or sales, and none of us, the Dealer Manager nor any of our or its representatives shall have any responsibility therefor.

 

Each Eligible Holder receiving this offering memorandum acknowledges that (1) it is an Eligible Holder, (2) it has been afforded an opportunity to request and to review, and it has received, all additional information considered by it to be necessary to verify the accuracy of or to supplement the information in this offering memorandum, (3) it has not relied upon the Dealer Manager or any person affiliated with the Dealer Manager in connection with its investigation of the accuracy of such information or its investment decision, (4) this offering memorandum relates to an offering that is exempt from registration under the U.S. Securities Act and may not comply in important respects with SEC rules that would apply to an offering document relating to a public offering of securities and (5) no person has been authorized to give information or to make any representation concerning us, the Tender Offers, the Solicitations or the New Notes, other than as contained in this offering memorandum in connection with an investor’s examination of us and the terms of the Tender Offers and the Solicitations.

 

Consent under Bermuda’s Exchange Control Act of 1972 (and its related regulations) has been granted by the Bermuda Monetary Authority for the issue and transfer of securities of Bermuda companies (other than certain equity securities) to and between non-residents of Bermuda for exchange control purposes. In granting such consent the Bermuda Monetary Authority does not accept any responsibility for DGL2, DGL1 or DGL0.5’s financial soundness or the correctness of any of the statements made or opinions expressed in this offering memorandum.

 

We have applied for and expect to receive a direction from the Minister of Finance that Part III and Section 35 of Part IV of the Companies Act 1981 of Bermuda shall not apply to the offering of the New Notes to non-U.S. persons in reliance on Regulation S and within the United States to qualified institutional buyers and this offering memorandum. The Minister of Finance accepts no responsibility for the financial soundness of any proposal or for the correctness of any of the statements made or opinions expressed herein.

 

NOTICE TO INVESTORS

 

This offering memorandum does not constitute an offer of, or an invitation to participate in, the Tender Offers and Solicitations to any person in any jurisdiction in which it would be unlawful to make such offer or invitation or tender offer under applicable securities law or blue sky laws. Each holder must comply with all applicable laws and regulations in force in any jurisdiction in which it purchases, exchanges, offers or sells New Notes or Existing Notes or possesses or distributes this offering memorandum and must obtain any consent, approval or permission required by it for the purchase, exchange, offer or sale by it of New Notes and Existing Notes, as the case may be, in connection with the Tender Offers under the laws and regulations in force in any jurisdiction to which it is subject or in which it makes such purchases, exchanges, offers or sales in connection with the Tender Offers, and none of DGL0.5 or the Dealer Manager or any of our or its representatives shall have any responsibility therefor. In addition, this offering memorandum is not an offer to purchase, nor the solicitation of an offer to sell, any of the Existing DL Notes, and this offering memorandum is not an offer to sell, nor the solicitation of an offer to buy, the New DL Tender Offer Notes (as defined herein).

 

Notice to Investors in the EEA and the United Kingdom

 

The New Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area (“EEA”) or the United Kingdom (“UK”). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU  (as amended, “MiFID II”); (ii) a customer within the meaning of Directive (EU) 2016/97 (as amended, the “Insurance Distribution Directive”), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Regulation (EU) 2017/1129 (as amended, the “Prospectus Regulation”). Consequently no key information document required by Regulation (EU) No 1286/2014 (as amended, the “PRIIPs Regulation”) for offering or selling the New Notes or otherwise making them available to retail investors in the EEA or in the UK has been prepared and therefore offering or selling the New Notes or otherwise making them available to any retail investor in the EEA or in the UK may be unlawful under the PRIIPS Regulation. This offering memorandum has been prepared on the basis that any offer of New Notes in any Member State of the EEA will be made pursuant to an exemption under the Prospectus Regulation from the requirement to publish a prospectus for offers of New Notes. This offering memorandum is not a prospectus for the purposes of the Prospectus Regulation.

 

References to Regulations or Directives include, in relation to the UK, those Regulations or Directives as they form part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 or have been implemented in UK domestic law, as appropriate.

 

The above selling restriction is in addition to any other selling restrictions set out below.

 

Notice to Investors in the UK

 

This offering memorandum is for distribution only to persons who (i) have professional experience in matters relating to investments and who qualify as investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the “Financial Promotion Order”), (ii) are persons falling within Article 49(2)(a) to (d) (“high net worth companies, unincorporated associations etc.”) of the Financial Promotion Order, (iii) are outside the United Kingdom, or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000, as amended (“FSMA”)) in connection with the issue or sale of any securities may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as “relevant persons”). This offering memorandum is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this document relates is available only to relevant persons and will be engaged in only with relevant persons.

 

Notice to Investors in Canada

 

The New Notes may be offered or sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the New Notes must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

 

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Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this offering memorandum (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.

 

Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the purchasers are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with the Tender Offers and Solicitations.

 

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TABLE OF CONTENTS

 

Page

 

Forward-Looking Statements 155
Presentation of Financial and Other Information 157
Industry and Market Data 163
Trademarks 164
Important Times and Dates 165
Summary 167
Summary of the Tender Offers and Solicitations 186
Summary of the New Notes 200
Summary Consolidated Financial and Operational Information 209
Risk Factors 216
Use of Proceeds 256
Capitalization 257
Selected Consolidated Financial Data and Operational Information 260
Management’s Discussion and Analysis of Financial Condition and Results of Operations 262
Industry Overview 304
Business 306
Regulation 366
Management 380
Certain Relationships and Related Party Transactions 387
Principal Shareholders 391
Description of Other Indebtedness 393
Description of the Tender Offers, Solicitations and Schemes 401
The Proposed Amendments and Waiver Solicitations 417
Description of the New DGL0.5 Unsecured Notes 420
Description of the New DGL0.5 Secured Notes 472
Description of the Convertible Notes 534
Book Entry, Delivery and Form 557
Material Bermuda and U.S. Tax Considerations3 562
Transfer Restrictions 571
Service of Process and Enforcement of Judgments 574
Certain Insolvency Law and Local Law Limitations 577
Legal Matters 579
Independent Accountants 579

 

__________________________

 

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Forward-Looking Statements

 

This offering memorandum contains various forward-looking statements that reflect management’s current views with respect to future events and anticipated financial and operational performance. The words “expect,” “estimate,” “believe,” “project,” “anticipate,” “should,” “intend,” “probability,” “risk,” “may,” “target,” “goal,” “objective” and similar expressions or variations on such expressions are considered forward-looking statements. Other forward-looking statements can be identified in the context in which the statements are made. These statements appear in a number of places throughout the document, including, without limitation, in “Risk Factors,” “Use of Proceeds,” “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements concern, among other things:

 

·strategies, outlooks and growth prospects;

 

·new products and services;

 

·future plans and potential for future growth;

 

·trends affecting Digicel’s financial condition or results of operations;

 

·liquidity, capital resources and capital expenditure;

 

·growth in demand for Digicel’s services;

 

·economic outlook and industry trends;

 

·development of Digicel’s markets;

 

·the impact of regulatory initiatives and the supervision and regulation of the telecommunications markets in general;

 

·political instability in the markets in which Digicel operates;

 

·operating risks including natural disasters;

 

·outbreaks of disease, such as the COVID-19 pandemic;

 

·possible renewal of licenses;

 

·competition in areas of Digicel’s business; and

 

·plans to launch new networks, products and services.

 

Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties; actual results may differ materially as a result of various factors. These factors include, but are not limited to:

 

·general economic conditions, the fluctuations or devaluations of local currencies, government and regulatory policies and business conditions in the markets served by Digicel and its affiliates and in markets in which Digicel seeks to establish operations;

 

·telecommunications usage levels, including traffic and customer growth;

 

·competitive forces, including price pressures, technological developments and Digicel’s ability to retain market share in the face of competition from existing and new market entrants;

 

·disruption of supplies and services from principal suppliers;

 

·regulatory developments and changes, including with respect to the level of tariffs, the terms of interconnection, customer access and international settlement arrangements and the outcome of litigation related to regulation and regulatory processes generally;

 

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·the success of business, operating and financial initiatives, the level and timing of the growth and profitability of new initiatives, start-up costs associated with entering new markets and launching new services, subscriber acquisition costs, costs of handsets and other equipment, the successful deployment of new systems and applications to support new initiatives and local conditions;

 

·the availability, terms and use of capital, the impact of regulatory and competitive developments on capital outlays, the ability to achieve cost savings and realize productivity improvements, and the success of Digicel’s investments, ventures and alliances;

 

·Digicel’s ability to complete the Reorganization Transactions (as defined herein), the Tender Offers or Schemes, as applicable, on the terms contemplated in this offering memorandum and the DL Tender Offers; and

 

·other factors discussed under “Risk Factors.”

 

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, as actual results could differ. Digicel undertakes no obligation to release publicly the result of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof, including, without limitation, changes in its business or acquisition strategy or planned capital expenditures, or to reflect the occurrence of unanticipated events.

 

Please note that Digicel provides a cautionary discussion of risks and uncertainties under “Risk Factors” of this offering memorandum. These are factors that Digicel thinks could cause its actual results to differ materially from expected results. Other factors besides those listed here could also adversely affect Digicel.

 

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Presentation of Financial and Other Information

 

This offering memorandum includes historical consolidated financial statements and certain financial data of Digicel Group Limited. Digicel Group 0.5 Limited will be the issuer of the New Notes.

 

In connection with the Reorganization Transactions (as defined herein), Digicel Investments Limited (“DIL”), (an affiliate of Digicel) controlled by Denis O’Brien, the Group’s founder, formed Digicel Group 0.5 Limited. If we elect to consummate the DGL1 Tender Offer, (i) DIL’s interest in Digicel Group 0.5 Limited will be contributed and/or transferred for nominal value to Digicel Group One Limited and (ii) Digicel Group One Limited’s interest in DPL (as defined herein), DL (as defined herein) and certain other subsidiaries will be contributed to Digicel Group 0.5 Limited upon settlement of the Tender Offers. If instead Digicel Group One Limited elects to promote a DGL1 Scheme, Digicel Group 0.5 Limited will purchase all of the assets of Digicel Group One Limited, including its interest in DPL, DL, DHCAL and certain other subsidiaries, in exchange for refinancing the debt of Digicel Group One Limited through the issuance of the New Notes in consideration for cancellation of the relevant series of the Existing Notes pursuant to and upon settlement of the DGL1 Scheme. In either case, Digicel Group One Limited’s interest in, and loans to, DHCAL (as defined herein), DPL, DL, DHCAL and certain other subsidiaries, together with intercompany balances, will be transferred to Digicel Group 0.5 Limited. Unless the context otherwise requires, Digicel refers to entities herein according to their names following the Reorganization Transactions. See “Summary—Corporate Reorganization and Group Structure.”

 

September 30, 2019 Financial Statements

 

The consolidated financial statements as of September 30, 2019 of Digicel Group Limited differ from those of Digicel Group Two Limited and Digicel Group One Limited, both unaudited entities, as of September 30, 2019, and will differ from those of Digicel Group 0.5 Limited as indicated below.

 

  DGL3 Differences from DGL3 to DGL2 DGL2 Differences from DGL2 to DGL1 DGL1 Differences from DGL1 to DGL0.5 DGL0.5
Non-current Assets 3,661.4 (443.1)  3,218.3 (7.9)  3,210.4 - 3,210.4
Current Assets – Other 473.6 -  473.6 (0.1)  473.5 -  473.5
Current Assets – Intercompany - 5.6 5.6 127.5 133.1 - 133.1
Cash and Restricted Deposits 207.1 (0.1)  207.0 (0.1)  206.9 -  206.9
Total Assets 4,342.1 (437.6)  3,904.5 119.4  4,023.9 -  4,023.9