Maritime, cruise and offshore satellite communications through Speedcast International will be guaranteed through a new financial deal that brings the provider back from bankruptcy
For Speedcast has secured US$615M of equity investment and debt refinancing, and support for its reorganisation plan. This includes US$395M in equity and US$220M in debtor-in-possession financing.
Debt-laden Speedcast voluntarily entered into US Bankruptcy Code Chapter 11 protection on 23 April as it ran out of time to pay lenders and creditors. Its debt ballooned following a half-decade of mergers and acquisitions, while revenues initially sank as cruise shipping and aviation sectors were demolished during the worldwide coronavirus pandemic.
Since entering Chapter 11 bankruptcy protection, Speedcast has negotiated refinancing and creditor payments, at first to cover continuous operations and now for its reorganisation.
Centerbridge Partners, one of its largest lenders, has committed US$395M in equity investment. This provides the opportunity for Speedcast’s existing secured lenders to participate in the equity commitment on a fully pro-rata basis to support its emergence from reorganisation under Chapter 11.
Speedcast can emerge under the new ownership structure to focus on supporting the connectivity needs of its maritime, offshore and cruise customers and continue uninterrupted global operations.
It will be under the new leadership of chief executive Peter Shaper and president/chief commercial officer Joe Spytek. They will continue to execute the transformation plan to refocus the business.
Centerbridge has also committed to providing, if needed, debtor-in-possession (DIP) financing of up to US$220M to refinance Speedcast’s existing DIP financing and to fund the company’s Chapter 11 plan process. This will provide funds for partial cash payments to critical trade creditors, such as providers of satellite coverage for maritime communications.
Speedcast plans to make cash payments to holders of secured claims and provide those relevant trade creditors with unsecured claims, who will share in recoveries from a litigation trust. But Speedcast’s reorganisation plan does not contemplate any recovery for existing shareholders, who would no longer have an equity interest in the reorganised Speedcast group.
Completion of the equity investment is subject to confirmation of the plan of reorganisation and other conditions including regulatory approvals and waivers.
In July, Speedcast signed a new bandwidth agreement with satellite owner Intelsat covering C-band and Ku-band connectivity. This agreement required approval from the US courts overseeing the financial restructuring cases for both Speedcast and Intelsat, which is also in Chapter 11 bankruptcy protection due to finance required for Intelsat’s major investment in C-band satellites for US coverage.
There were also reports in July that Speedcast had paid most of its outstanding invoices to satellite operator Inmarsat, which was Speedcast’s second-largest creditor.
Inmarsat filed a claim to Speedcast’s bankruptcy court requesting payment for undisputed and outstanding invoices, and within 48 hours these were paid.
Speedcast uses Inmarsat’s satellite constellations to provide Ka-band Global Xpress and L-band FleetBroadband connectivity to ships, offshore drilling rigs and cruise ships.