Telecommunications and power contractor QualTek Services Inc. filed for bankruptcy yesterday, armed with a restructuring deal that could slash $307 million of the company's $625 million debt, Reuters reported. QualTek filed for chapter 11 protection in Houston, saying that increasing debt costs were beginning to cut into its operating budget, at a time when inflation was already causing it to pay more for labor and energy. Rate hikes caused QualTek's 2022 interest expense to balloon by 33% to $59.3 million, according to its court filings. QualTek went public through a special-purpose acquisition vehicle (SPAC) deal in February 2022, just before the Federal Reserve began raising interest rates in an effort to curb inflation in the U.S. economy. QualTek's public offering raised "far less" equity investment than the company anticipated, requiring it to take on additional interest-bearing debt, according to court filings. QualTek enters bankruptcy with a restructuring agreement that is supported by 80% of its lenders, who are collectively owed $625 million. The restructuring deal would reduce the company's overall debt by $307 million and provide $40 million of new loans that will fund the company's post-bankruptcy operations. QualTek hopes to emerge from bankruptcy within 65 days, and it plans to pay vendors in its supply chain and other junior creditors in full. The Blue Bell, Pa.-headquartered company has 1,800 employees, and it provides a range of telecom and power infrastructure services throughout the U.S.
