Apollo Shares Fall After Portfolio Company Brightspeed Issues 'Going Concern' Warning

Shares of Apollo Global Management (NYSE:APO) fell 3.5% in Tuesday trading after a report that its portfolio company, broadband provider Brightspeed, warned there is substantial doubt about its ability to continue as a going concern.

Brightspeed's Financial Strain

According to a Bloomberg report citing people familiar with the matter, Brightspeed added the "going concern" warning to its financial documents as it actively seeks new financing to meet upcoming debt obligations. The disclosure highlights the financial pressures facing the company.

The broadband provider's second-quarter revenue reportedly declined 8.7% from the prior year to $386 million. For the six months ended June 30, Brightspeed posted a net loss of $879 million and a negative operating cash flow of $341 million. As of that date, the company held $1.17 billion in cash and cash equivalents.

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Search for Financing and Context

Brightspeed is reportedly exploring several options to strengthen its balance sheet, including a potential asset-backed securitization. In response to the developments, a group of the company's debt investors has retained advisors from Moelis & Co. and the law firm Gibson Dunn & Crutcher, Bloomberg reported.

The company's financial challenges stem from a capital-intensive, multi-billion-dollar project to build a fiber internet network. Brightspeed, which launched in 2022, is focused on deploying fiber to primarily rural and suburban communities across 20 states, a strategy that has resulted in significant debt and cash burn.