Research Update: U.S. TelePacific Holdings Corp. Downgraded To 'SD'; Debt Rating Lowered To 'D'

U.S.-based competitive telecommunications and cloud provider U.S. TelePacific Holdings Corp. (d/b/a TPx Communications) completed an exchange of its $663 million outstanding senior secured term loan B due in May 2026. About half of the debt will be up-tiered into a new super-senior first-lien tranche and the remainder purchased by private equity sponsor Siris Capital at 40% of par. We view the transaction as a distressed exchange given the high likelihood of a conventional default without it and our view that lenders did not receive adequate compensation for the debt restructuring. Therefore, we lowered the issuer credit rating on TPx to 'SD' (selective default) from 'CCC-'. We also lowered our issue-level rating on the company's senior secured debt to 'D' from

... cloud provider U.S. TelePacific Holdings Corp. (d/b/a TPx Communications) completed an exchange of its $663 million outstanding senior secured term loan B due in May 2026. About half of the debt will be up-tiered into a new super-senior first-lien tranche and the remainder purchased by private equity sponsor Siris Capital at 40% of par. - We view the transaction as a distressed exchange given the high likelihood of a conventional default without it and our view that lenders did not receive adequate compensation for the debt restructuring. - Therefore, we lowered the issuer credit rating on TPx to '##' (selective default) from '###-'. We also lowered our issue-level rating on the company's senior secured debt to 'D' from '###-'. - We will reassess the ratings on the new debt as soon as practicable....

Research Update