Prison-Phone Firm Aventiv to Explore Sale, Extend Debt Under New Deal

Jeremy Hill, Bloomberg News

(Bloomberg) -- Platinum Equity’s Aventiv Technologies reached a tentative deal with lenders that calls for the prison-phone company to sell itself sometime in the next year, according to a person with knowledge of the matter.

The deal — struck with its owner and a lender group holding almost all of the company’s secured debt — also provides Aventiv an eight-month extension of more than $1 billion of debt that’s currently due in November, according to the person, who asked not be be identified discussing a private matter.

Platinum and the lenders will give Aventiv an additional $40 million of capital in the form of new debt as part of the transaction. If the sale process doesn’t go as planned, Aventiv may pivot to restructuring its debt through a bankruptcy filing or otherwise rework its obligations outside of court, the person said.

The deal is a major step forward for Aventiv, which has been working to address a heavy debt load for months. The company facilitates phone calls, online messaging and other communication tools for incarcerated people.

A representative for Aventiv declined to comment. Platinum didn’t immediately respond to a request for comment.

Platinum, the private equity firm run by billionaire Tom Gores, bought Aventiv in 2017 for $1.6 billion. Since then, the company and Gores — who owns professional basketball’s Detroit Pistons — has faced criticism for profiting from prisoners and their families. They’ve also faced backlash from criminal justice reform groups for charging excessive fees. The firm subsequently trimmed call rates and have been providing free minutes and video calls, according to its website.

Financial pressure on Aventiv heated up last year when a plan to refinance its debt load through a $1.1 billion bond-and-loan deal languished. That left it staring down a rapidly approaching term loan maturity in November of this year that totals more than $1 billion.

The new deal gives Aventiv additional breathing room by allowing it to pay loan interest with more debt, also know as payment in-kind, the person said.

--With assistance from Reshmi Basu.

(Adds context beginning in paragraph six.)