American Teleconferencing Services

About

American Teleconferencing Services, Ltd. offers conference call and group communication services. The company offers automated, operator-assisted, and Web conferencing services. The company was founded in 1984 and is based in Overland Park, Kansas. As of April 23, 1998, American Teleconferencing Services, Ltd. operates as a subsidiary of Premiere Global Services, Inc.

PGi is owned by Siris Capital.

Corporate Highlights

10/1/2018: New CEO named.

Mr. Joos succeeds Ted Schrafft who is retiring and has agreed to remain in an advisory role through the end of 2018. Mr. Joos brings a deep industry knowledge and a strong track record of transforming high-tech companies. Most recently, he served as the President and CEO of ShoreTel driving that business from a pure product play into one of the leading companies in the UCaaS space. Before ShoreTel, Mr. Joos was with Avaya in a variety of executive roles.

BDC Credit Reporter View

6/8/2019: From our perspective when Moody’s warns  – just a few months ago – that the risk of default is “high” and the capital structure is “unsustainable” we have to pay attention. The BDC lenders themselves have been slow to react. As of the IVQ 2018 valuation when S&P had made similar dark warnings some BDCs (SLRC) were carrying the first lien at a premium to book and the second lien (CSWC) at a modest (15%) discount. As of the IQ 2019 there are still wide variations but the more “conservative” BDCs have discounted the second lien by (45%) and the first lien by (34%). This suggests that Moody’s concerns were on point. There is $160mn at risk across the BDC universe, so this company deserves attention. At the moment the publicly traded debt – according to Advantage Data – is trading at a modest discount for the first lien but still at a (45%) discount for the second lien. There’s $30mn of the junior debt outstanding and the chances – at the very least – of moderate losses at that level seem high. Even the senior debt might take a whacking and – at least for a period – go on non accrual. In aggregate there’s around $16mn of annual investment income at play spread over 9 players. SLRC has the biggest chunk ($30mn) but in the first lien and is the most optimistic of the lenders.

Highlights

IQ 2019: CSWC sharply reduced its valuation in both the first and second lien debt.

1/28/2019: Moody’s downgrades ATS to Caa2

The downgrade of the CFR reflects Moody’s view that PGi’s EBITDA will deteriorate significantly over the next 12 months. In addition, the company’s plan to offset a precipitous decline in its legacy audio conferencing revenues through a new Unified Communications as a Service (UCaaS) offering has high execution risk. The UCaaS market is large and growing rapidly but is highly competitive with several established players that have significant resources and a long track record of successful product adoption by enterprise customers. Given PGi’s challenges, Moody’s believes that the company’s ability to meet covenants beyond 2Q 2019 is highly uncertain and the capital structure is unsustainable. The risk of default and debt impairment is high given the continuing erosion in revenues and EBITDA. The scheduled maturity of PGi’s revolving credit facility in December 2020 limits the available time to demonstrate the commercial success of new products. Since its leveraged buyout PGi has executed on significant cost reductions that have mitigated the impact of declining revenues. But sustained revenue declines in the legacy audio conferencing revenues and prior execution challenges in launching competitive new products result in high business risks.

IVQ 2018: Added to Watch List (CCR 3) due to valuation at BDCs and S&P downgrade.

IVQ 2016: Several BDCs add second lien exposure. Total outstandings: $120.3mn.

IIQ 2016: BDC exposure begins with $91mn of exposure to 2021 senior Term Loan.