Aventiv Technologies has proposed to give common shares to lenders as part of a liability management plan to address near-term maturities borrowed under subsidiary Securus Technologies, according to two sources familiar with the situation.

The Platinum Equity-backed prison telecommunications company is having confidential negotiations with an ad-hoc group of lenders to extend its near-term debt due 2024 and 2025, said the sources. Lenders advised by Gibson Dunn and Evercore coalesced after the company failed to get a refinancing deal across the finish line this May. On the advisory side, sponsor Platinum Equity is consulting with law firm Willkie Farr, according to sources. The PE firm has a long-standing relationship with the law firm.

The May transaction, led by Deutsche Bank, comprised a four-year USD 700m first lien term loan guided at SOFR+ 600bps and a 97 OID, alongside a four-year USD 400m senior secured note offering carrying a roughly 11% yield. Platinum also offered to inject USD 400m of cash to incentivize investors to participate in the deal.

Proceeds were earmarked to repay the borrower’s existing covenant-lite USD 1.087bn first lien term loan due 2024 and USD 282.5m second lien term loan due 2025. The issuer also has a USD 225m revolver maturing August 2024 that was fully drawn as of 30 June, according to a Moody’s ratings release.

After the refinancing effort was pulled, Aventiv and lenders continued discussions over the summer without progress. S&P and Moody’s recently downgraded the company to CCC- and Caa3, respectively, due to its inability to refinance the debt.

Aventiv used its revolver to fund a program to allow tablet-based inmate communication but revenues from these “debt-funded capital-intensive efforts have been mixed,” Moody’s noted in a report earlier this month. With its revolver fully drawn, the company had only USD 6.7m of cash at the end of June, the ratings report noted.

To bolster the company’s coffers, Platinum provided additional support by injecting USD 10m of cash and USD 15m of debt in 2023. The ratings agency noted the sponsor also provided an additional “secured instrument” that is pari passu to Aventiv’s first lien loan.

The USD 1.087bn Libor+ 450bps first lien term loan due 2024 was last quoted 84/86.25, while the USD 282m L+ 825bps second lien loan was quoted 64.8/67.4, according to Markit.

Aventiv, Platinum, Gibson Dunn and Evercore did not return requests for comments.