Research Update: U.S. TelePacific Holdings Corp. Downgraded To 'CCC+' On Weak Operating And Financial Results: Outlook Negative

Despite improving economic conditions, U.S.-based competitive telecommunications provider U.S. TelePacific Holdings Corp.'s (d/b/a TPx Communications) operating and financial results remain weak as the company transitions its customer base to managed services and away from its legacy business services segment. Underperformance and one time transformation and merger costs have contributed to elevated S&P Global Ratings-adjusted debt to EBITDA, which we expect will be in the 11x-13x area in 2021. At the same time, we expect that ongoing free operating cash flow (FOCF) deficits will pressure the company's liquidity position as its revolving credit facility matures in May 2022. We therefore lowered all ratings one notch, including the issuer-credit rating, to 'CCC+' from 'B-'. The negative outlook reflects the potential for a

...- Despite improving economic conditions, U.S.-based competitive telecommunications provider U.S. TelePacific Holdings Corp.'s (d/b/a TPx Communications) operating and financial results remain weak as the company transitions its customer base to managed services and away from its legacy business services segment. - Underperformance and one time transformation and merger costs have contributed to elevated S&P Global Ratings-adjusted debt to EBITDA, which we expect will be in the 11x-13x area in 2021. - At the same time, we expect that ongoing free operating cash flow (FOCF) deficits will pressure the company's liquidity position as its revolving credit facility matures in May 2022. - We therefore lowered all ratings one notch, including the issuer-credit rating, to '###+' from 'B-'. - The negative outlook reflects the potential for a downgrade if liquidity continues to weaken, the company engages in a transaction that we view as distressed, or if we believe the company will likely default...

Research Update