Moody's cuts TPx PDR to D-PD

Moody's Investors Service said it downgraded U.S. Telepacific Corp.'s (TPx) corporate family rating to Caa2 from Caa1 following the company's recent closing of a debt amendment and exchange offer. The outlook remains negative.

Concurrently, the agency lowered TPx's probability of default to D-PD as it considers the exchange a distressed exchange. Moody's also downgraded the rating on the company's previously outstanding super-priority senior secured first-lien credit facilities, comprised of a $24.9 million super-priority senior secured first-lien revolving credit facility due November 2025 and a $639 million super-priority senior secured first-lien term loan due May 2026, to Ca from Caa1, but these ratings will be withdrawn in the near term because of the exchange.

While about $19 million of the $24 million drawn under the 2025 revolver was exchanged in the transaction, the $5 million that was not exchanged will continue unrated and outstanding as a first-lien instrument equal in ranking to the company's new amended first-lien senior secured term loan due May 2026, but with no covenants given the amendments. TPx will not have any other revolving credit facility going forward and is expected to rely on its owner, Siris Capital Group, for liquidity and to maintain compliance under a $20 million minimum liquidity covenant in the first-lien term loan, the agency said.

In a few business days, Moody's said in a press release, it will raise “TPx's D-PDR to Caa2-PD, consistent with the probability of default expectation embedded in the Caa2 CFR.” The agency gave a B2 to TPx's new first-lien $331.52 million loan and a Ca rating to a $33.15 million third-lien senior secured term loan due May 2027. TPx issued both loans under the exchange.

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