Intelsat Files for Bankruptcy

McLean, Va., May 14, 2020-Satellite operator Intelsat has filed a voluntary Chapter 11 petition in the U.S. Bankruptcy Court for the Eastern District of Virginia, Richmond Division. The company said the bankruptcy filing is part of a "financial restructuring" that is "intended to enhance the company’s liquidity and will likely result in a substantial reduction of Intelsat’s legacy debt burden, allowing for Intelsat to emerge with a strengthened balance sheet to complement its strong operating model and future growth plans."

Intelsat General (IGC), which serves the company’s U.S. commercial, government, and Allied military customers, is not part of the Chapter 11 proceedings.

One of the primary catalysts for restructuring the balance sheet is Intelsat’s desire to participate in the accelerated clearing of C-band spectrum under the Federal Communications Commission (FCC) order in support of a build-out of 5G wireless infrastructure in the United States. To meet the FCC’s accelerated clearing deadlines and ultimately be eligible to receive US$ 4.87 billion of accelerated relocation payments, Intelsat needs to spend more than US$1 billion on clearing activities. These clearing activities must start immediately, long before costs begin to be reimbursed. The Company is also managing the economic slowdown impacting several of its end markets caused by the COVID-19 global health crisis according to a company statement.

Intelsat said it has secured a commitment for US$1 billion of new financing. Subject to court approval, this debtor-in-possession financing, coupled with cash on hand and positive cash flow generated by the business, will provide ample liquidity during the restructuring process to support ongoing operations, fund the substantial upfront C-band clearing costs, and allow the company to continue investing in innovations required by its customers.

Intelsat said that it is filing with the court a series of customary motions seeking to maintain business-as-usual operations and uphold its commitments to its stakeholders, including employees, customers, and vendors, during the restructuring process. Approval of these “first day” motions, which the company expects to receive in short order, will help facilitate a smooth transition into the process.

“At the end of this process, we will be on stronger financial footing for the future, further enhancing our industry-leading portfolio of space-based communications services and paving the way for our continued innovation and investments to benefit our customers,” said Intelsat CEO Stephen Spengler.

Intelsat carries almost US$ 15 billion of debt, a legacy of multiple private equity owners over the past decade who loaded up the company's balance sheet to make acquisitions and pay dividends according to Fortune.com. Last month Intelsat missed a bond payment and hired bankruptcy lawyers and advisers in preparation for making a Chapter 11 filing.

Court filings and information about the claims process are available at https://cases.stretto.com/intelsat