Securus Technologies: Debt For Equity Restructuring Agreed

Remains Rated CCR 5 And An Important Underperformer

April 17, 2025

After many months, Securus Technologies Inc. (aka Aventiv Technologies) has hashed out a restructuring plan between its PE owner - Platinum Equity - and its lenders. In a press release which left out many key details we were told:

Key terms include eliminating the majority of outstanding debt from the Company's balance sheet in exchange for equity shares in the business.

Also:

The debt-for-equity exchange is subject to regulatory notice periods and/or approval from federal and state regulators that oversee and / or license the Company's products and services. While the Company and the Supporting Lenders have committed to working together to quickly obtain such approvals and submit such notices, it is expected to take several months for the process to complete. In the meantime, the Supporting Lenders will provide $360 million in financing to the Company to support the Company's operations throughout the regulatory review and approval process, and to immediately retire the Company's existing revolving credit facility.

As of the IVQ 2024, according to Advantage Data's records, total BDC exposure to the company amounted to $129mn at cost, spread between 6 BDCs, 4 of whom are publicly traded: BlackRock TCP (TCPC); CION Investment (CION); MidCap Financial (MFIC) and Prospect Capital (PSEC). The aggregate value of BDC exposure - all in first and second lien debt - was down to $42mn. That's a big decrease from just the quarter before when the value was set at $95mn.

As the press release says, this restructuring will take time to be approved so we won't see the final impact on the BDCs involved till the second half of the year. As before, and as we've been warning for many months, a very substantial realized loss is likely to be booked when the debt-for-equity swap is approved. We continue to believe 75%-100% of the $94mn in second lien debt will be written off and up to 25% off the $35mn in first lien debt. We could see total realized losses amount to around ($100mn), depending on what sort of valuation the BDCs place on their new equity positions.

Income - already much reduced because all the second lien and a little bit of the first lien debt is non-performing - is likely to drop further. However, the new monies being advanced by the lenders may increase interest income but will also grow the total amount that has been invested in this controversial and troubled business. Far and away the biggest casualty - on paper - is likely to be PSEC followed by TCPC, with CION and MFIC holding relatively modest positions.

With this proposed restructuring Securus/Aventiv is entering a new phase. For the BDCs involved, it may be many years yet before this is all over, so expect further updates from the Credit Reporter in the future. For the moment, though, we are maintaining our corporate credit rating of 5 and the company remains an Important Underperformer.