U.S. TelePacific Holdings Corp.

The company's liquidity position will become further constrained when its revolver comes due in May 2022 and its $75 million receivables facility matures in August 2022, although half of this facility is owned by its sponsor, which we expect it will renew. In addition to the maturity of its revolver, TPx's senior secured term loan B ($573 million outstanding) comes due in May 2023. Given the secular challenges facing the U.S. wireline industry and the company's weak financial results since its acquisition by Siris, we believe it could difficult for it to refinance this obligation prior to maturity if its ongoing business transition toward managed services does not lead to a material increase in its EBITDA in 2022. That said,

...U.S. TelePacific Holdings Corp.'s (TPx) near-term liquidity is adequate, although it may face difficulty in refinancing its upcoming maturities. As of March 31, 2021, the company had about $36 million of cash and equivalents, full availability under its $25 million revolving credit facility, and $63 million available under its equipment receivables facility. It also received a $25 million equity infusion from its private-equity sponsor, Siris, after the first quarter of 2021. TPx uses the equipment receivables facility to fund the sale of equipment to its customer base on an installment basis, which results in working capital deficits that contribute to its negative FOCF generation. The company recorded a FOCF deficit of $143 million in 2020, although we expect its cash burn to moderate to $50 million-$60 million in 2021 as certain one-time merger and business transformation costs wind down. That said, we do not expect TPx to generate positive FOCF until at least 2023. The company's liquidity...

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