Brightspeed in talks with creditors for $2bn to $3bn of new money

Brightspeed sells service in parts of 20 states and had passed 3 million fiber-enabled locations by April. It aims to reach 4 million by the end of this year, according to the company.

Creditor talks

People familiar with the matter told Bloomberg that the amount and whether the money comes through a court process or outside one are still being worked out. Brightspeed and Apollo declined to comment. The company warned in September that it might not be able to continue as a going concern.

Brightspeed is seeking new capital through an asset-backed facility secured by subscription cash flows from its new fiber network, the Wall Street Journal reported. Peers have used the same tool. Optimum Communications, formerly Altice USA, secured a $1bn loan from hybrid fiber/coax assets in the Bronx and Brooklyn last summer, and Frontier Communications, now part of Verizon, securitized Dallas-area fiber assets for $2.1bn, Light Reading reported.

Loan quotes are at distressed levels. A $2.6bn delayed-draw term loan traded near 66.25 cents on the dollar on Friday, against 17.25 cents for a $2.5bn payment-in-kind facility, Bloomberg reported. Both mature in 2031.

Moody's Ratings in August cited very high debt, operating pressures and execution risks tied to the company's capital-intensive transformation.

A build that outran its cash

Apollo bought Lumen's local phone and broadband business for $7.5bn in 2022 and relaunched it as Brightspeed. The company is spending heavily to bring fiber to mostly rural and suburban areas in those states. In 2024 the company cut $1.1bn of debt and raised $3.7bn of new financing with lenders. Fiber sales grew 16% year over year.

New Street Research analyst David Barden wrote that 'Time is ticking and a lengthy bankruptcy filing only damages value for everyone (except other, better-resourced, opportunistic fiber overbuilders).' He estimates Brightspeed needs about $3bn to fund itself through 2027. Barden put gross debt at $11.6bn at the end of the third quarter and cash at $1.2bn, leaving net debt of about $10.4bn.

A new chief executive

Brightspeed named Shawn O'Donnell chief executive on 2 November, succeeding acting CEO Michel Combes, who stays on as chairman. O'Donnell was most recently a senior managing director at FTI Consulting, where he led its Americas telecom, media and technology practice. The appointment was effective immediately.

The appointment came days after the Wall Street Journal reported that a bankruptcy filing could come as soon as December. Brightspeed made no reference to that report in its announcement.

The debt stack

Apollo holds a third-out secured-debt slice, people familiar with the debt said. Arini Capital Management holds part of the second-out tranche. The structure of any new financing will help determine recoveries across the stack, Briefs reported.