Coronavirus has taken another corporate victim as satellite constellation owner Intelsat filed for Chapter 11 bankruptcy protection to restructure its debt
Intelsat was forced to make this move as it manages the economic slowdown impacting several of its end markets caused by the Covid-19 global health crisis.
Intelsat’s management expects this corporate protection to enable it to substantially reduce its legacy debt burden and strengthen its balance sheet ready for a new wave of investment in connectivity as it prepares to roll out 5G connectivity and ultra-high throughout satellites.
Intelsat and some of its subsidiaries have filed voluntary Chapter 11 petitions in the US Bankruptcy Court for the Eastern District of Virginia, Richmond Division.
It intends to use a resulting reduced-debt position to participate in the accelerated clearing of C-band spectrum under the US Federal Communications Commission (FCC) order to support building up 5G wireless infrastructure in the US.
To meet the FCC’s accelerated clearing deadlines and be eligible to receive US$4.87Bn of accelerated relocation payments, Intelsat needs to spend more than US$1Bn on clearing activities first.
These need to begin immediately, long before costs start to be reimbursed, said Intelsat chief executive Stephen Spengler.
“This is a transformational moment in the history of our company,” he said. “Our success has come despite being burdened in recent years by substantial legacy debt. Now is the time to change that.”
He said Chapter 11 protection and debt restructuring will “position us to invest and pursue our strategic growth objectives, build on our strengths, and serve the mission-critical needs of our customers with additional resources and wind in our sails.”
Intelsat will continue launching new satellites, investing in its ground networks, developing new services and developing its next-generation network while in Chapter 11 protection.
Intelsat has secured a commitment for US$1Bn of new financing to cover its clearing activities to meet FCC’s requirements.
This debtor-in-possession financing, coupled with significant cash on hand and positive cash flow generated by the business, will provide ample liquidity during the restructuring process to support ongoing operations and fund the substantial upfront C-band clearing costs, Intelsat said.
Intelsat has invested in a new constellation of high throughput satellites, EpicNG, to deliver fast connectivity to various sectors, but especially cruise ships and offshore rigs and vessels. Both of these markets have been severely impacted by the Covid-19 global crisis.
For more details on Intelsat and its investment in satellites for maritime communications - please review Riviera’s Complete Guide to VSAT
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