Research Update: U.S. TelePacific Holdings Corp. Downgraded To 'CCC-' From 'CCC+' On Receipt Of Notice Of Default, Outlook Negative

U.S.-based competitive telecommunications and cloud provider U.S. TelePacific Holdings Corp. (doing business as TPx Communications) received a notice of default because it failed to deliver its financials and covenant compliance certificate for the third quarter of 2021 when it was due. The company's credit agreement includes a 30-day grace period to provide the required documents. We believe that TPx is looking to negotiate an amendment to the facility that would provide it with additional runway, given the ongoing declines in its revenue and cash flow as it transitions its business. This transaction will likely include an extension of its maturities, which we may view as distressed, and covenant relief. Therefore, we lowered our all of our ratings on TPx, including

... cloud provider U.S. TelePacific Holdings Corp. (doing business as TPx Communications) received a notice of default because it failed to deliver its financials and covenant compliance certificate for the third quarter of 2021 when it was due. The company's credit agreement includes a 30-day grace period to provide the required documents. - We believe that TPx is looking to negotiate an amendment to the facility that would provide it with additional runway, given the ongoing declines in its revenue and cash flow as it transitions its business. This transaction will likely include an extension of its maturities, which we may view as distressed, and covenant relief. - Therefore, we lowered our all of our ratings on TPx, including our issuer credit rating, by two notches to '###-' from '###+'. - The negative outlook reflects the company's narrowing liquidity and high debt balances, which could lead to a distressed exchange or default over the next...

Research Update