Despite generating positive EBITDA, TPx Communications could not service its substantial debt obligations from that cash flow, according to court documents. So it filed for bankruptcy.
A first-lien loan is the highest-ranking debt that gets paid first in a bankruptcy.
A second-lien loan stands behind it. The company had already restructured its debt multiple times. Still, it could not keep up.
TPx has a plan to escape bankruptcy. It asked a federal judge to approve a debtor-in-possession financing facility.
The facility includes a new $20 million loan and a $53.5 million roll-up. A roll-up means some existing debt is converted into new financing. In this case, Siris Capital Group and other lenders are providing the money.
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In a court filing, Steven Shenker, the company's chief restructuring officer, stated, "Siris and the creditors have agreed to a recapitalization plan, contingent on the company not finding a buyer during the bankruptcy process." TPx has until early August to run an auction should any bids emerge.
TPx initiated talks with an ad-hoc lender group last year, then secured forbearance after it failed to make a payment due on its first-lien loan. That ad-hoc group comprised creditors including Apollo Global Management Inc.
If no buyer steps forward, TPx will restructure on its own. After emergence, its debt would be around $129 million, slashing about $1 billion in obligations. In a 2023 debt restructuring, Siris acquired roughly half of TPx's senior debt at discounts and converted it into about $397 million of second-lien debt.
The company will hold an auction if any bids come in. If a sale happens, the debt numbers could change.
If not, the restructuring plan goes ahead. The judge must approve the financing first.
The key date is early August. If no buyer appears, TPx will emerge with a much lighter debt load. Siris Capital's role will be important because it owns a big chunk of the second-lien debt. The bankruptcy court will decide on the financing soon.
TPx Communications provides managed voice, data, and cybersecurity services to mid-sized businesses. Its heavy debt load originated from a series of leveraged buyouts and refinancings, including a 2023 restructuring that shifted some obligations from first-lien to second-lien status. That earlier deal gave Siris Capital a large stake in the company's junior debt, positioning it as a key player in the current bankruptcy.
The company's positive EBITDA - about $100 million annually - was not enough to cover interest payments exceeding $80 million per year, leaving little room for operational investment or market shifts. This financial strain ultimately forced the Chapter 11 filing.
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