Vivint Inc.’s bonds tumbled by the most in 2015 as the company advised investors not to rely on its earnings reports from the past year after identifying errors.
The 8.75 percent unsecured bonds of the home-security provider slid as much as 4.25 cents to 85.9 cents on the dollar and yielded 12 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. Vivint, which was purchased in a 2012 leveraged buyout by a Blackstone Group LP-led group, delayed the earnings call for the latest quarter scheduled for Tuesday in addition to announcing errors in its financial statements.
Dale Gerard, Vivint’s treasurer, declined to comment, as did Blackstone spokesman Peter Rose.
Vivint’s $930 million of bonds coming due in December 2020 are rated seven levels below investment grade by Standard & Poor’s at CCC+ and an equivalent Caa1 at Moody’s Investors Service. S&P revised its outlook on the Provo, Utah-based company’s borrowings to negative in June, citing high leverage and weak cash flow from operations.
A company rated that low is considered vulnerable to non-payment and is dependent on favorable business, financial and economic conditions for it to be able to meet its financial obligations, ratings definitions show.
Blackstone acquired Vivint for about $2 billion in a deal that included Vivint Solar and 2GIG Technologies, a residential-security business. Vivint Solar was taken public last year and Blackstone agreed to sell it to SunEdison Inc. in July.