Executive Summary

New Credit Agreement provides for an initial term loan commitment of $200 mn, delayed draw term loan commitments of $50 mn, and uncommitted pari passu incremental term loans of up to $350 mn. Unrestricted subsidiaries’ assets serve as the primary collateral base securing the new money financing. We believe that a significant portion of LPR’s assets have been transferred from the restricted group to the unsubs, including at least a portion of spectrum licenses and fixed network assets in Puerto Rico.

Drop down transaction primes existing debtholders. The new money financing from Diameter Capital was funded at the unrestricted subsidiary level. Thus, this credit facility is structurally senior to the existing senior secured debt. In advance of this announcement, LPR had pursued an alternative financing arrangement with an ad hoc group of existing creditors, but failed to reach an accord at this time.

Liquidity position improved, with proceeds likely being used to repay the revolver. Proceeds from the new money financing will be distributed onward to LPR via a senior secured intercompany loan. We expect LPR will use some of the proceeds to pay down its revolver, which was fully drawn after the end of 2Q. We believe that LPR’s liquidity runway has now been extended through to the maturity wall of 2027.

Second stage of debt restructuring remains uncertain as to both timing and structure. We see potential arguments for negotiation leverage on behalf of both the Company as well as the remaining ad hoc group of creditors following the recent drop-down transaction. The Company’s motivation at this point is to bring down leverage in advance of divesting the LPR business, however, creditors are unlikely to be willing to allow it to monetize deep debt discounts without getting something significant in return. Meanwhile, coercive exchange mechanics may be challenging to execute given the continued existence of the ad hoc group.