Citing market volatility and concerns that the company could not get the almost US$2 billion it had hoped for with an initial public offering on the New York Stock Exchange, Digicel canceled its IPO just days before the company was to be listed on the exchange.
The telecommunications company, which is based in Jamaica, in a late September filing with the U.S. Securities and Exchange Commission said it expected the IPO price to be between US$13 and US$16 per share, raising about US$1.6 billion to US$2.3 billion. However, between the Sept. 22 filing and Tuesday this week, the company changed its mind.
Digicel Chairman Denis O’Brien said in a statement, “Given our growth outlook, an IPO for Digicel was optional and predicated on achieving fair value for the company. Recent volatility in equity markets has seen a number of IPOs listing at a discount to their signaled price range and this was a less attractive route for us.”
Much of the cash Digicel anticipated to raise in the IPO – $1.3 billion according to the September SEC filing – was earmarked to pay down the company’s debt. According to the documents, Digicel had invested heavily in telecom infrastructure in recent years.
Mr. O’Brien said in the statement, “Digicel is now at a key juncture in our growth story following a $1.5 billion investment programme over the past three years; we generate strong and growing free cash flow and we have no material debt maturities until 2021.
“Our growth plans remain unchanged and we remain in a strong position to exploit areas of interest in: Data, Business Solutions, Cable TV and Broadband.”
Stock analysts had flagged the dual-class share structure that would have left Mr. O’Brien owning 60 percent of the company with 94 percent of the voting rights, leaving investors with no control on the board.
Once left to family-run companies, especially in the media, the dual-class structure has become popular in the tech world. Facebook, LinkedIn and Google all had IPOs in recent years with dual-class structures.