TSL Express Daily News

A group of private credit firms led by HPS Investment Partners provided more than $3 billion of debt to Consumer Cellular Inc. to refinance its broadly syndicated loans and pay a dividend to its private equity owner GTCR, according to people with knowledge of the matter.

Blackstone Inc. and Public Sector Pension Investment Board also participated in the financing for the US mobile network operator, according to the people, who asked not to be identified discussing private information. The entire lender group consisted of more than 10 firms, said the people.

The financing included a roughly $3.4 billion term loan, $200 million revolver as well as $525 million of preferred equity, according to one of the people.

Representatives for Blackstone, PSP Investments, HPS and GTCR declined to comment. A representative for Consumer Cellular didn’t respond to a request for comment.

The company had around $2.8 billion of broadly syndicated debt as of last year, according to a report from Moody’s Ratings. The ratings firm withdrew its corporate ratings on Consumer Cellular on Monday.

Funds of private credit firms, including Blackstone, Antares Capital, Palmer Square Capital Management and Blue Owl Capital Inc., had purchased pieces of the broadly syndicated debt, according to public filings.

Grappling with a lack of initial public offerings, mergers and acquisitions, buyout firms have been under pressure to find other ways to distribute cash to their investors. Many have turned to debt to fund such payouts, known as dividend recapitalizations.

In its report last year, Moody’s said Consumer Cellular had an “aggressive financial policy prioritizing shareholder returns under its financial sponsor.”

The company tapped the debt markets to fund a $1.1 billion dividend in 2022, which was greater than GTCR’s initial equity investment and the founder’s rollover equity at the time of the 2020 acquisition, and another $340 million dividend last year, according to Moody’s.