Liberty Puerto Rico’s new unrestricted subsidiary financing lays claim to a significant portion of the company’s recently transferred assets, which could give management negotiating leverage over creditors in potential delevering exchange negotiations. However, with the liquidity runway now extended, management may be emboldened to bide its time, just as members of the bondholder/lender ad hoc group may be unwilling to allow the company to capture deep debt discounts, according to CreditSights analysts.

In a new report titled “Liquidity Extended, Collateral Ended,” CreditSights senior telecom infrastructure analyst Erick Vega and senior special situations analyst Jory Eisenberg detail the company’s latest move while also exploring several new scenarios that could further alter the capital structure.

In broad strokes, the Puerto Rico-centric telecom, which itself is a subsidiary of parent Liberty Latin America, raised a $200mn 9.75% TL due 2030 along with a $50mn delayed draw term loan funded by Diameter Capital. The debt is issued by three newly created unsub co-borrowers (Emerald Wave 3 LLC, Emerald Mobile Network 2 LLC and Emerald Network 3 LLC), and covenants allow for the company to also raise pari passu incremental loans of up to $350mn.

Proceeds, via a senior secured intercompany loan, are likely destined to pay down revolver borrowings on a fully tapped $172.5mn revolver, ensuring a leverage covenant isn’t tripped at the end of Q3’25. CreditSights now views the company’s liquidity runway as sufficient into 2027, which may give the business time to execute a turnaround.