JSE-listed Blue Label Telecoms (BLT), subsidiaries The Prepaid Company (TPC) and Comm Equipment Company (CEC), along with Cell C, SPV4 and SPV5, have entered into an implementation agreement, setting out the terms of the proposed restructure of the group.

This as BLT continues to consider various strategic options and initiatives to unlock and deliver value for its shareholders, including the potential restructure of BLT and its subsidiaries.

The implementation of the pre-listing restructuring, which remains subject to approval by the boards of BLT and Cell C, requisite shareholder and regulatory consents and favourable market conditions, besides others, will facilitate a separation and potential listing of a newly incorporated holding company of Cell C (Cell C ListCo) on the prime segment of the main board of the JSE.

According to an update to shareholders issued on Sens on Monday, in terms of the implementation agreement, and subject to the fulfilment of the suspensive conditions, the parties have entered into a series of transactions aimed at optimising Cell C's capital structure and balance sheet in preparation for the separation and potential listing on the JSE.

Simultaneously with the potential listing, TPC, also subject to market conditions, shareholder, regulatory and board approvals, will make an offer for the sale of a portion of its shares in Cell C ListCo to qualifying investors post the implementation of the pre-listing restructuring.

“From a BLT perspective, the Cell C listing, together with the benefits to be derived from Cell C's turnaround strategy and its improved sustainability, are expected to enhance the value of Cell C and in turn restore its shareholder value,” the company said in the update.

Further, the Cell C listing is expected to deliver significant benefits to BLT and Cell C, including providing Cell C with access to capital markets on an independent basis, which it may use to support further growth and to finance acquisitions or investments; and elevating the Cell C brand through its potential listing on the JSE.

Currently BLT owns 100% of TPC which, in turn, owns 100% of CEC and 49.53% of Cell C.

Post the pre-listing restructuring, it is expected that BLT, through TPC, will own a significant majority of the shares in Cell C ListCo, although TPC's shareholding in Cell C will decrease pursuant to the sell-down.

The terms of the pre-listing restructuring set out the first step, which entails the 'TPC debt-to-equity conversion', in terms of which various claims held by TPC against Cell C will be converted into equity by Cell C issuing Cell C shares to TPC at a price equal to the pre-listing restructuring price per share. The total value of the claims that will be converted by TPC into equity are R3.68-billion, excluding accrued interest.

According to the shareholder update, this will be followed by the ‘CEC exchange’, in which TPC will dispose 100% of the issued shares in CEC to Cell C, in exchange for Cell C shares. The Competition Tribunal granted approval for Cell C's proposed acquisition of CEC on August 21.

Another next step includes TPC disposing of Cell C airtime to Cell C for shares, followed by the sale, by SPV4 and SPV5, of all of the Cell C shares owned by it to TPC.

If the Cell C listing goes ahead, a pre-listing statement will be published by Cell C ListCo, and the details of the Cell C listing will be announced to shareholders, in due course.