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TKC Holdings, a portfolio company of H.I.G. Capital, is seeking creditor approval to spin off prisoner phone services company Inmate Calling Solutions via a management buyout.
Why it matters: When a for-profit prison services company like TKC decides a business has become too politically toxic to own, you know there's a serious problem. Particularly when it wants to divest so badly that it's willing to hurt its own credit-worthiness.
- TKS would help finance the deal via $280 million in new debt, including a $220 million PIK note.
The bottom line: "The controversial prison phone industry has come under fire for charging inmates as high as $25 for a 15-minute call... ICS and [rival] Securus, which was once owned by HIG but is now a portfolio company of Platinum Equity, dropped plans to merge in April 2019 after the Justice Dept and FCC raised concerns that the deal could harm competition," writes Bloomberg's Davide Scigiluzzo.
Go deeper: Global merger and acquisition activity decreased in 2019