Media Reports Intelsat Exploring Bankruptcy Protection Loan

Tysons Corner, Va., April 15, 2020--Various meida report, among them Bloomberg news is reporting that satellite operator Intelsat SA is seeking backers for a bankruptcy loan that would keep the satellite service in business under Chapter 11 court protection while it’s waiting for billions of dollars in proceeds from a government spectrum auction. 

JPMorgan Chase & Co. is shopping the debtor-in-possession loan to institutional investors, many of whom specialize in financial restructuring, according to people with knowledge of the plans. The loan of about US$ 750 million would help fund necessary improvements to Intelsat’s spectrum ahead of the C-Band auction set to begin later this year, according to Bloomberg.

Applying for bankruptcy protection under Chapter 11 of the US Bankruptcy Law will allow Intelsat to restructure its US$ 14 billion debt burden. According to Bloomberg,  Intelsat needs to spend US$ 1.5 to 2.5 billion  to prepare for spectrum sales, but can earn up to US$ 4.8 billion by handing over its C-band spectrum within a specified period.

Intelsat’s debt will begin to mature in June 2021, and according to Business Intelligence (BI) analyst Flynn, even if it can get spectrum transfer fees, its leverage will still be very high, and the debt will be It is about 8 times its key revenue indicator next year. As of December 31 last year, the company had US$ 810 million in cash.

The Bloomberg report cited insiders that said the company has been exploring other financing options, including debt-to-equity swaps. They said that the company is working with consultants from investment bank PJT partner company and Kaiyi law firm.

Intelsat was already struggling even before the COVID-19 pandemic hit. Cowen & Co. analyst Vitanza issued a warning in March that the unprecedented disruption of broadband mobile and live broadcasting business "will inevitably worsen the situation."