Tear Sheet: U.S. TelePacific Holdings Corp.

As of March 31, 2024, the company had $25 million of cash on its balance sheet and no availability under its revolving credit facility due 2025. While TPx has generated persistent free operating cash flow (FOCF) deficits, it benefits from infusions of second-lien debt from its private-equity sponsor, Siris Capital, that enable it to remain in compliance with its $20 million minimum cash balance covenant, although the additional capital is not contractually committed. In 2023, the company generated negative FOCF of about $107 million, though we expect its FOCF deficit will contract to the $10 million-$15 million range in 2024 and 2025, primarily due to a step-down in legacy expenses tied to the retirement of its competitive local exchange carrier

...June 7, 2024 U.S. TelePacific Holdings Corp.'s (TPx) liquidity is weak, though it receives ongoing support from its private-equity sponsor. As of March 31, 2024, the company had $25 million of cash on its balance sheet and no availability under its revolving credit facility due 2025. While TPx has generated persistent free operating cash flow (FOCF) deficits, it benefits from infusions of second-lien debt from its private-equity sponsor, Siris Capital, that enable it to remain in compliance with its $20 million minimum cash balance covenant, although the additional capital is not contractually committed. In 2023, the company generated negative FOCF of about $107 million, though we expect its FOCF deficit will contract to the $10 million-$15 million range in 2024 and 2025, primarily due to a step-down in legacy expenses tied to the retirement of its competitive local exchange carrier (CLEC) network and an associated reduction in its capital expenditure (capex). TPx's debt covenants will...

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