S&P trims Mitel Networks

S&P said it lowered its ratings for Mitel Networks (International) Ltd. to CCC from CCC+, its $156 million of super-priority debt due 2027 and new $65 million revolver credit facility due 2025 to B- from B-, its $576 million second-out facility due 2027 to CCC from CCC+ and its $157 million third-out facility due 2027 and first-and second-lien term loans to CC from CCC-. The recovery ratings are unchanged.

“Our downgrade reflects Mitel's deteriorating liquidity position and weaker-than-previously forecast operating performance. Through the last 12 months of first-quarter 2023, Mitel has benefited from an increase in customer migrations from existing Mitel users to RingCentral's (RC) platform; however, results came in substantially below our expectations, impaired by lower cloud revenues and product component shortages due to supply-chain issues,” S&P said in a press release.

The agency warned it estimates Mitel's EBITDA (S&P Global Ratings-adjusted) will be lower than previously forecasted for 2023, which will cause its S&P Global Ratings-adjusted leverage to remain unsustainable at above 10x for the foreseeable future. “In our view, Mitel might need to pursue additional distressed exchanges or debt restructurings over the next 12 months.”

The outlook is negative.

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