Research Update: TalkTalk Telecom Group Ltd. Downgraded To ?CCC-? On Potential Liquidity Shortfall; Outlook Negative

In our view, the probability that U.K.-based broadband provider TalkTalk Telecom Group Ltd. (TalkTalk) could implement a debt restructuring or face a near-term liquidity shortfall has increased. This is because it has not yet concluded a refinancing or a transaction with a new equity partner that would bring additional investment in its wholesale platform (PXC), which--together with new debt issuance--would have allowed the company to refinance its capital structure. TalkTalk's almost fully drawn revolving credit facility (RCF) matures in November 2024. We expect the company will breach its net debt-to-EBITDA covenant under its RCF at the next testing date in August 2024, and this will be reported to lenders by the end of October 2024. Furthermore, the company's £685 million

...- In our view, the probability that U.K.-based broadband provider TalkTalk Telecom Group Ltd. (TalkTalk) could implement a debt restructuring or face a near-term liquidity shortfall has increased. This is because it has not yet concluded a refinancing or a transaction with a new equity partner that would bring additional investment in its wholesale platform (PXC), which--together with new debt issuance--would have allowed the company to refinance its capital structure. - TalkTalk's almost fully drawn revolving credit facility (RCF) matures in November 2024. We expect the company will breach its net debt-to-EBITDA covenant under its RCF at the next testing date in August 2024, and this will be reported to lenders by the end of October 2024. Furthermore, the company's ú685 million senior secured notes will mature in less than nine months. - We understand that TalkTalk is working on an alternative transaction that would consider existing shareholders injecting about ú200 million funding in...

Research Update