Research Update: U.S. TelePacific Holdings Corp. Ratings Lowered To 'B-' From 'B', Outlook Stable

Los Angeles-based competitive telecommunications provider U.S. TelePacific Holdings Corp. (doing business as TPx Communications) completed its acquisition by private equity firm Siris Capital Group LLC in a sponsor-to-sponsor transaction. Notwithstanding a reduction in S&P Global Ratings' adjusted leverage given the conversion of the company's existing $297 million of preferred stock to common equity, we believe the company could be challenged to refinance its debt maturities in 2022 and 2023. We are lowering the ratings on the company, including the issuer credit rating, one notch to 'B-' from 'B'. At the same time, we are removing all the ratings from CreditWatch, where they were placed with negative implications on July 25, 2019. The stable rating outlook reflects our view that TelePacific

... provider U.S. TelePacific Holdings Corp. (doing business as TPx Communications) completed its acquisition by private equity firm Siris Capital Group LLC in a sponsor-to-sponsor transaction. - Notwithstanding a reduction in S&P Global Ratings' adjusted leverage given the conversion of the company's existing $297 million of preferred stock to common equity, we believe the company could be challenged to refinance its debt maturities in 2022 and 2023. - We are lowering the ratings on the company, including the issuer credit rating, one notch to 'B-' from 'B'. At the same time, we are removing all the ratings from CreditWatch, where they were placed with negative implications on July 25, 2019. - The stable rating outlook reflects our view that TelePacific has adequate liquidity over the next year to fund negative working capital and free operating cash flow (FOCF) given the equity infusion from its private equity sponsor. It also reflects our...

Research Update