Spain-based KronosNet CX Bidco 2022 S.L. (a subsidiary of KronosNet Topco S.L. [Konecta]) recently entered a forbearance agreement valid until Dec. 18, 2026, that allows it to defer its interest payments on the senior secured term loan B (TLB) and revolving credit facility (RCF) until their respective maturities, which we view as temporary support for the company's liquidity. We understand Konecta is reviewing its capital structure with several stakeholders, which we see as highly likely to result in a distressed restructuring given high leverage, negative free operating cash flow (FOCF) after leases and low debt trading levels. The operating environment, with generative AI challenging the company’s business model, exacerbates these issues despite adaption efforts. We raised our long-term issuer credit
