Canada-based broadband company Xplore, formerly known as Xplornet Communications, is in discussions to secure approximately $400m (C$534.93m) in fresh financing through a strategic asset shuffling and borrowing manoeuvre, as disclosed by sources familiar with the matter to Bloomberg.
The proposed funding, facilitated by private equity supporter Stonepeak Partners, aims to bolster Xplore’s financial standing, mitigating the impact of tightened liquidity and declining subscribership.
The infusion of capital is earmarked for fortifying the company’s balance sheet and supporting the expansion of its high-speed internet network, a crucial service, particularly in rural communities.
The financial strategy being considered is referred to as a “drop-down transaction,” involving the transfer of assets into new legal entities, distinct from existing creditors. This approach often raises concerns among creditors that may feel excluded from the reshuffling.
Sources indicated to Bloomberg that Xplore is contemplating an option that would enable current lenders to participate in the proposed financing.
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However, specific terms are still under negotiation, with the company having recently met its debt interest payment obligation at the close of the previous year.
According to research company GlobalData’s Canada Telecoms Operator Report, total telecom and pay-TV service revenue in the country will increase from $44.4bn in 2022 to $47.1bn in 2027, at a compound annual growth rate (CAGR) of 1.2%, supported by strong growth in mobile data revenue and marginal growth in fixed broadband revenue.
Mobile data service revenue, meanwhile, will grow from $13.3bn in 2022 to $19bn in 2027 at a five-year CAGR of 7.3%, according to the report. This will be driven by growing mobile subscriptions and increasing data average revenue per user on the back of growing adoption of 5G services.
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