Apollo’s Brightspeed Casts Going Concern Doubt as Revenue Slides

Brightspeed, the broadband provider backed by Apollo Global Management Inc., warned investors that there’s substantial doubt it will be able to continue as a going concern, as it presses ahead with its search for financing to meet looming debt obligations.

The company added the warning to financial documents as it reported an 8.7% decline in second-quarter revenue to $386 million compared with the year earlier, according to people familiar with the matter.

Brightspeed told debt investors that it’s exploring financing options — including an asset-backed securitization — to shore up its balance sheet, the people said, asking not to be identified discussing private information.

A group of the company’s debt investors is working with Moelis & Co. and Gibson Dunn & Crutcher, other people familiar said.

Representatives for Brightspeed, Apollo and Moelis declined to comment. Representatives for Gibson Dunn didn’t respond to requests for comment.

Read More: Brightspeed to Seek As Much As $2.25 Billion in Fresh Funding

Brightspeed, which started operations in 2022, is engaged in a multi-billion-dollar effort to bring fiber internet to mostly rural and suburban communities in 20 states. But the project has saddled it with debt and burned through cash, leaving it facing “very high financial leverage, ongoing operating pressures, and execution risks tied to its capital-intensive transformation strategy,” Moody’s Ratings wrote in an August report.

For the six months through June, Brightspeed reported a net loss of $879 million and negative operating cash flow of $341 million, according to the people. As of June 30, it had $1.17 billion of cash and cash equivalents, and positive working capital of $677 million, the people said.

Still, fiber sales have climbed 16% year-over-year and in April, the company announced it had surpassed 3 million fiber-enabled locations.

Brightspeed undertook what Moody’s deemed a distressed debt exchange in the second half of 2024, reaching a deal with lenders to slash $1.1 billion from its debt and receiving $3.7 billion of new capital. Since then, it’s tapped incremental capital raises to fund its broadband buildout.