TelePacific Corp., operating as TPx Communications, has engaged in confidential discussions with an ad hoc group of lenders as it explores options for its approaching debt maturities. The company has a revolving credit facility set to expire in May 2022. Earlier reports indicated that affiliates of Siris Capital acquired TPx in February 2020. However, more recent information suggests that these debt negotiations between TPx and its creditors have ended, with representatives from Siris and Apollo declining to comment, while TPx did not respond to inquiries.
TPx has faced financial challenges, including a ratings downgrade by S&P Global Ratings to CCC+, with a negative outlook, citing weak performance and liquidity pressure expected over the next 12 to 18 months. The company experienced a free cash flow deficit in 2021. Despite these issues, TPx completed a debt exchange in June 2023, restructuring a $655 million super-priority credit facility and a $19 million revolving credit facility. This transaction increased its total debt by $103 million but included a $65 million capital infusion from Siris Capital, leading to an upgrade to 'CCC' from 'SD' (selective default) by S&P, though the outlook remained negative.
As of March 31, 2024, TPx had $25 million in cash and no available funds on its revolving credit facility due in 2025. The company has persistently generated negative free operating cash flow, reporting a deficit of approximately $107 million in 2023. However, S&P Global Ratings projects this deficit to contract to the $10 million-$15 million range in 2024 and 2025, primarily due to reduced legacy expenses from its competitive local exchange carrier (CLEC) network retirement and lower capital expenditures. TPx has relied on ongoing, uncommitted infusions of second-lien debt from Siris Capital to maintain compliance with its $20 million minimum cash balance covenant.
