Intelsat obtains bankruptcy court approval to exit Chapter 11 in early 2022
TAMPA, Fla – Intelsat is set to exit Chapter 11 in early 2022, after its bankruptcy court approved a restructuring plan that cuts the satellite operator’s debt from around $ 16 billion to $ 7 billion. billions of dollars.
The approval of the United States Bankruptcy Court for the Eastern District of Virginia marks the final judicial step in a Chapter 11 process that began in May 2020.
Intelsat CEO Stephen Spengler said the company will now exit Chapter 11 early next year following regulatory approvals and securing funding under the restructuring plan to recapitalize the company .
He said the bankruptcy court approval came after the plan gained support from all creditors groups in Intelsat’s complex capital structure.
Wide support came after satellite operator SES agreed to drop its opposition to the restructuring plan, in exchange for changes in the way Intelsat allocates assets among Intelsat entities after the bankruptcy.
The changes were made amid a lawsuit that SES has brought against Intelsat over how the proceeds of C-band compensation should be allocated among satellite operators.
“If SES succeeds, Intelsat will be obligated to make a payment to SES in accordance with the distribution provisions of the amended reorganization plan,” said Suzanne Ong, vice president of external communications at SES.
SES also agreed to drop its claim for punitive damages as part of the negotiation.
A court hearing on SES’s request is scheduled to begin on February 7.
Intelsat said it was able to reap nearly $ 5 billion in total C-band spectrum clearing revenue, which the company says will help reduce its debt.
After meeting a key regulatory deadline to release part of the spectrum, the operator expects to receive $ 1.2 billion of these revenues in January.
Return to growth
Intelsat will become a private company with former bondholders as shareholders as part of the restructuring plan.
Spengler said PIMCO, a US investment management firm, is expected to be Intelsat’s largest shareholder after the bankruptcy with a stake of around 30%.
According to Spengler, who plans to retire shortly after the company exited Chapter 11, the restructuring plan “creates a very different Intelsat with a solid financial base and financial flexibility for the future, and it positions us well to participate fully in the market” and invest in a “fully software-defined system.” network based on 5G technology.
Samer Halawi, Executive Vice President and Chief Commercial Officer of Intelsat, discussed the plans for 10 software-defined satellites in October News interview.
The company has issued a RFP for the satellites as part of a multi-orbital growth strategy that could also include its own broadband constellation in low Earth orbit.
Halawi recently announced his intention to resign from Intelsat at the end of the year.