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Liberty Latin America announced that Liberty Puerto Rico has successfully raised $250m in secured financing through third party financing from Diameter Capital.

The facility — of which $200m has been drawn and $50m will be available over the next 12 months — has been raised through unrestricted subsidiaries and is backed by certain fixed network and wireless spectrum assets of the Puerto Rico business. Term loans under the facility mature in 2030 and have a 9.75% fixed coupon.

The disclosure materials included in the 8-K released by the company show that the company, prior to making this deal with Diameter, entered into negotiations with an ad hoc group of holders of Liberty Puerto Rico’s $620m term loan due 2028 and the secured notes due 2027 and 2029, a group 9fin had reported organized with Evercore and Akin Gump.

This ad hoc group exchanged proposals with the company, but an agreement ultimately didn’t materialize after the last proposal, dated 18 September 2025, was exchanged. Liberty announced that it intends to continue discussions with the ad hoc group.

According to the 8-K filed by Liberty Latin America on 25 September, the proceeds of the term loans from Diameter are expected to be used by the borrowers — who as noted above are unrestricted subsidiaries — to (i) fund one or more senior secured loans to Liberty Mobile Puerto Rico pursuant to an intercompany loan agreement entered into on 23 September, and (ii) pay fees and expenses in connection with the transactions.

Although the new credit agreement has not yet been filed, the 8-K states that the credit agreement also provides for uncommitted pari passu incremental term loans of up to $350m, and allows for $350m in pari first lien debt or additional debt — potentially uncapped — on a second lien or unsecured basis.

Christopher Noyes, Liberty Latin America’s CFO, stated in the press release: ““As part of the strategic initiatives announced during our [Q2 25] earnings results, we set out the intention to meet liquidity requirements in Puerto Rico utilizing local Puerto Rican assets. We are pleased…to confirm such a facility which serves to provide incremental capital to further support business operations and future investments.”

With its Q2 25 results in August, Liberty Latin America had announced plans to spin off its underperforming Puerto Rico business and restructure its debt. This move prompted a selloff in Liberty Puerto Rico’s 6.75% senior secured notes due 2027 and 5.125% senior secured notes due 2029, and creditors represented by Evercore and Akin Gump began discussing options. Its revolver lenders had organized with Guggenheim Partners and Cleary, according to Bloomberg.

Read 9fin’s analysis of Liberty Latin America and Liberty Puerto Rico’s troubles here.

Liberty Puerto Rico holds 600 MHz low-band spectrum licenses (for long distance coverage and indoor reach) combined with Advanced Wireless Services (AWS) (for faster data and capacity in populated zones) and CBRS spectrum licenses.

In September 2024, Liberty completed the acquisition from EchoStar of over 100 MHz of low, mid and high-band spectrum, along with EchoStar’s prepaid business in Puerto Rico and the US Virgin Islands for $256m in cash. Around $85m of the consideration is payable in the aggregate in 2026 and 2027.

In Q2 25, the company recorded an impairment loss of $494m on the value of the spectrum assets owned by Liberty Puerto Rico, citing “challenges relating to the operationalization” of the spectrum. The carrying value of Liberty Puerto Rico’s spectrum licenses was $777.3m on 30 June.

The road not (yet) taken

The disclosure materials, which include a summary of the terms exchanged between the Evercore/Akin ad hoc group and the company, suggest that parties were considering a deal similar to the one reached with Diameter.

Assets that were to be transferred to the unsubs to secure that facility would have been worth around $750m, per the 8-K filing. It’s unclear if these same assets secure the Diameter facility.

Based on the disclosed final proposal, the primary points of contention with the ad hoc group appeared to be over basket capacity. The company sought to have $350m in incremental pari 1L capacity and unlimited incremental second lien capacity at the unsub, and the ad hoc group wanted no junior lien capacity and only $50m delayed draw capacity at the unsub.

Additionally, the company wanted continued flexibility under the covenants, with the ability to have a majority of lenders amend the documents, while the ad hoc group wanted tightened negative covenants including resizing existing baskets, eliminating or reducing structural senior debt capacity, eliminating dividend capacity, as well as the unrestricted subsidiary concept and the builder basket, and having an LME blocker.

Additional thoughts

The company’s existing debt documents provided the company with substantial flexibility and capacity to complete a transaction, drop-down or otherwise. The company had a large credit facilities basket, flexible investment baskets, a restricted payments builder basket that dated back to 2019, coupled with no Serta or J. Crew blockers. Although SEC filings at the Puerto Rico silo limit the ability to clearly calculate exact capacity, the company prior to the transaction may have had around $3bn in capacity for a transaction, according to a 9fin source. Accordingly, even with the current transaction, since the company did not agree with the ad hoc groups proposal which would have reduced or eliminated much of the remaining capacity — which is likely substantial — the company can very likely pursue multiple follow on transactions to the extent needed and to the extent existing holders want to engage.

Moelis acted as financial adviser and Ropes & Gray acted legal counsel to Liberty Puerto Rico.

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