Private equity firm Platinum Equity owns prison and jail telecom contractor Aventiv Technologies (formerly Securus). The largest and one of the most predatory providers of phone and communications services to jails, prisons, and immigration detention centers in the U.S., Aventiv relentlessly preys upon incarcerated people and their families to bolster their bottom line and create returns for investors.
Since its highly-leveraged acquisition of then-Securus in 2016, Platinum Equity has repeatedly assured investors that despite rampant public criticism, increased regulation capping rates, and legislative efforts to make prison and jail communication free, the risks of maintaining this prison industry asset are manageable. The market does not agree. After multiple rounds of failed efforts to sell Aventiv or refinance maturing debt, both S&P Global and Moody’s have downgraded Securus’ upcoming maturities to “junk grade,” citing poor returns from recent investments in tablets that it expected to offset sliding revenues caused by new regulation and legislation, among other things. And the situation is likely only going to get worse for Aventiv – more regulation stemming from the Martha Wright Reed Act is looming and over a dozen states are bringing legislation to make prison and jail communication free in 2024.
Aventiv’s/Securus’ looming debts include:
- Fully-drawn $225 million revolving credit facility due August 2024
- $1.1 billion first-lien term loan due November 2024
- $283 million second-lien leveraged loan due November 2025
Bloomberg reports that lenders are beginning talks with Aventiv about a possible distressed refinance, which could drive the company’s credit ratings even lower. During its failed bond offering earlier this year, Platinum Equity promised to inject more equity capital to sweeten the deal, which still failed to attract investors, but also raised questions about where such funds would come from since the fund that owns Aventiv (Platinum Equity Capital Partners IV) has little capital left to invest. If Platinum tries this tactic again, it would almost certainly need to rely on capital raised from newer funds.