CommScope Holding Co. Inc.

Overview Key strengths Key risks Substantial scale and leading market positions in wireless and broadband communications equipment. $1.3 billion debt maturity in 2025 and $4.5 billion debt maturity in 2026 may create refinancing risk or a distressed exchange scenario in coming years. Growing data consumption provides a longer-term tailwind to network equipment and infrastructure spending. Very high leverage of over 11x and limited prospects for substantial near-term deleveraging. A recovery in margins and free cash flow may provide the company with better prospects to refinance its upcoming maturities. Volatile customer capital spending provides limited visibility into revenue and demand. Adequate liquidity underpinned by over $456 million of cash and a $568 million availability under an asset-based lending (ABL) facility that

...We continue to view CommScope Holding Co. Inc.'s capital structure as unsustainable as it faces elevated refinancing or distressed exchange risk on its upcoming debt maturities. Following CommScope's unsuccessful negotiations with some of its creditors it disclosed at the end of the third quarter of 2024, the company hasn't provided any new details on how it will proceed with its upcoming debt maturities of $1.3 billion unsecured notes due in June 2025 and $4.5 billion secured debt due in first half of 2026. Although the $2.1 billion cash proceeds from its recent announcement to sell its Outdoor Wireless Networks (OWN) segment and Distributed Antenna Systems (DAS) business provide CommScope flexibility to address the 2025 unsecured notes, it doesn't have the liquidity to address the secured debt maturing in 2026. Furthermore, the sale of these businesses doesn't significantly improve its leverage, even if divestiture proceeds fully paid down debt. If the company does not find other alternatives...

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