Jul 1, 2024
ViaPath Places Refinancing Deal On Hold Following FCC Proposal
Bloomberg News
,![LOS ANGELES, CA - JULY 14: Razor wire is seen on the Metropolitan Detention Center prison as mass arrests by federal immigration authorities, as ordered by the Trump administration, were supposed to begin in major cities across the nation on July 14, 2019 in Los Angeles, California. The U.S. Immigration and Customs Enforcement was expected to be target hundreds of Angelenos for deportation, plus family members and others they encounter and suspect of being undocumented. The city of Los Angeles declared itself a sanctuary city to reflect its policy since the 1970s of not allowing police to help immigration officials because the city wants its immigrant populations to not be afraid to cooperate with police or call in crimes and emergencies. Elected officials and activists have continued to lash out against the raids. (Photo by David McNew/Getty Images), Photographer: David McNew/Getty Images North America LOS ANGELES, CA - JULY 14: Razor wire is seen on the Metropolitan Detention Center prison as mass arrests by federal immigration authorities, as ordered by the Trump administration, were supposed to begin in major cities across the nation on July 14, 2019 in Los Angeles, California. The U.S. Immigration and Customs Enforcement was expected to be target hundreds of Angelenos for deportation, plus family members and others they encounter and suspect of being undocumented. The city of Los Angeles declared itself a sanctuary city to reflect its policy since the 1970s of not allowing police to help immigration officials because the city wants its immigrant populations to not be afraid to cooperate with police or call in crimes and emergencies. Elected officials and activists have continued to lash out against the raids. (Photo by David McNew/Getty Images)](/polopoly_fs/1.2091668.1719881786!/fileimage/httpImage/image.jpg_gen/derivatives/landscape_620/los-angeles-ca-july-14-razor-wire-is-seen-on-the-metropolitan-detention-center-prison-as-mass-arrests-by-federal-immigration-authorities-as-ordered-by-the-trump-administration-were-supposed-to-begin-in-major-cities-across-the-nation-on-july-14-2019-in-los-angeles-california-the-u-s-immigration-and-customs-enforcement-was-expected-to-be-target-hundreds-of-angelenos-for-deportation-plus-family-members-and-others-they-encounter-and-suspect-of-being-undocumented-the-city-of-los-angeles-declared-itself-a-sanctuary-city-to-reflect-its-policy-since-the-1970s-of-not-allowing-police-to-help-immigration-officials-because-the-city-wants-its-immigrant-populations-to-not-be-afraid-to-cooperate-with-police-or-call-in-crimes-and-emergencies-elected-officials-and-activists-have-continued-to-lash-out-against-the-raids-photo-by-david-mcnew-getty-images.jpg)
(Bloomberg) -- Prison telecom provider ViaPath Technologies has placed a nearly-finished debt deal on hold after the Federal Communications Commission proposed rules to reduce phone and video call rates for incarcerated individuals, according to people with knowledge of the matter.
The decision was made to give the company and investors time to understand how the new rules could impact ViaPath’s business, said the people, who were not authorized to discuss details publicly. Discussions for the refinancing are ongoing, one of the people said.
Texas Capital Bank has been running the transaction, which was expected to wrap up on July 2. The deal was almost done when the FCC announced the rules last week.
ViaPath, which was previously known as Global Tel*Link or GTL, is owned by private equity firm American Securities. Representatives for American Securities and Texas Capital Bank declined to comment. A representative for ViaPath did not immediately respond to requests for comment.
The FCC’s proposal calls for a drastic reduction in the cost of audio calls, imposes new caps on video services and prohibits providers from making commission payments to the jails and prisons in which they operate, according to a document posted on the agency’s website on Thursday. The FCC will vote on the proposed rules on July 18.
ViaPath’s debt deal is crucial: it would refinance existing obligations maturing in 2025 and 2026. Companies typically refinance debt at least one year in advance.
The company had been in discussions with investors to obtain a $1.375 billion loan with pricing of 7.5 percentage points over the Secured Overnight Financing Rate and an original issue discount of 98 cents on the dollar.
Companies in the prison services industry have faced higher borrowing costs and narrowing options to refinance debt. That is partly because of increased regulatory risk, but also because some investors and major banks have been distancing themselves from the sector over environmental, social and governance concerns in recent years.
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