Prison-Phone Firm ViaPath Closes In on $1.45 Billion Refinancing

Paula Seligson and John Sage, Bloomberg News

Razor wire tops a fence at the U.S. prison at Guantanamo Bay, also known as "Gitmo" on October 22, 2016 at the U.S. Naval Station at Guantanamo Bay, Cuba. Photographer: John Moore/Getty Images South America , Photographer: John Moore/Getty Images

(Bloomberg) -- ViaPath Technologies, a company that provides phone and communications services to prisoners, is closing in on a nearly $1.5 billion refinancing, according to people with knowledge of the matter.

The American Securities-backed business is in discussions to receive a $1.45 billion first-lien term loan in a transaction led by Texas Capital Bank, the people said, asking not to be named discussing a private situation.

Pricing is being discussed at 7.5 percentage points over the Secured Overnight Financing Rate and at a discounted price of 98 cents on the dollar, the people added.

The new loan has attracted roughly enough investor demand to meet the intended size, and it would refinance the company’s existing first- and second-lien debt, the people said.

Representatives for American Securities, ViaPath and Texas Capital Bank declined to comment.

ViaPath hired Texas Capital Bank earlier this year to help it refinance debt, Bloomberg reported in April. The firm has been exploring several avenues to handle debt maturing in 2025 and beyond, including asking existing lenders for an extension and reaching out to private credit firms for new financing.

The new loan’s pricing would lead to a yield of nearly 13% based on current SOFR levels. Companies in the prison services industry have faced higher borrowing costs and narrowing options to refinance debt, in part because of increased regulatory risk, but also because several investors and major banks have been distancing themselves from the sector over environmental, social and governance concerns in recent years.

ViaPath competitor Aventiv Technologies, which is owned by Tom Gores’ Platinum Equity, has struggled to refinance its debt, forcing it to reach a tentative deal with lenders that calls for the company to sell itself sometime in the next year.

Falls Church, Virginia-based ViaPath provides communication, educational and vocational services, according to its website. The company has previously said it’s committed to using technology and services to break the cycle of incarceration.

The current company name is over two years old, and the firm was previously known as Global Tel*Link as well as GTL. ViaPath posted adjusted earnings before interest, taxes, depreciation and amortization of $75.7 million for the quarter ended June 30, Bloomberg reported last year.

ViaPath previously received a $940 million first-lien term loan that priced at 4.25 percentage points over the benchmark, due in November 2025, and a $475 million second-lien loan that priced at 10 percentage points over the benchmark, due in November 2026, according to Bloomberg data. The facilities represent a weighted cost of capital of around 6 percentage points over the benchmark, below where the new deal is being discussed.

--With assistance from Ellen Schneider.