Xplore Inc., which provides high-speed internet service in rural communities, is planning to raise fresh financing by shuffling assets into new legal entities and borrowing against them, according to people familiar with the situation.
The Canadian company, formerly known as Xplornet Communications Inc., would receive a loan of around US$400 million, said the people, who asked not to be identified discussing a private matter. Proceeds would be used to shore up Xplore’s balance sheet and help fund network expansion, they said.
The new financing would be led by private equity backer Stonepeak Partners, according to the people.
Shifting collateral into different legal entities — and away from existing creditors — then borrowing against the transferred assets is known in industry jargon as a drop-down transaction. Such deals often draw the ire of left-out creditors.
Xplore is considering an option that would allow existing lenders to participate in the new financing, the people said. Terms are still being hashed out, they said, adding that the company made a debt interest payment due at the end of last year.
Xplore is working with Perella Weinberg Partners, Bloomberg News reported in November, while lenders organized with Greenhill & Co. and Gibson Dunn & Crutcher.
A Stonepeak representative declined to comment Wednesday. Xplore, Perella, Greenhill and Gibson Dunn didn’t reply to requests for comment.
S&P Global Ratings downgraded Xplore by a notch to CCC+ last May, citing subscriber losses and eroding liquidity.
Its $995 million term loan due in 2028 is quoted at around 60 cents on the dollar, versus 78 cents in October. BNN Bloomberg