Intelsat, the communications satellite services provider, has filed voluntary Chapter 11 petitions in the U.S. Bankruptcy Court for the Eastern District of Virginia. The move is to enable financial restructuring, ahead of C-band spectrum changes for 5G services.
The restructuring process is to improve the company’s liquidity and reduce its legacy debt burden, says Intelsat. A strengthened balance sheet will serve its future growth plans, it states.
While it moves as quickly as possible through the restructuring process, says the company, its “day-to-day operations, engagement with customers and partners, and capital investments will continue as usual”.
The primary catalyst for the restructuring is Intelsat’s desire to participate in the accelerated clearing of C-band spectrum under the FCC (Federal Communications Commission) plans to support the build-out of 5G wireless infrastructure in the United States.
“To meet the FCC’s accelerated clearing deadlines and ultimately be eligible to receive $4.87 billion of accelerated relocation payments, Intelsat needs to spend more than $1 billion on clearing activities,” says the announcement. “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.”
Intelsat General (IGC), which serves the Company’s U.S. commercial, government, and Allied military customers, is not part of the Chapter 11 proceedings.
“This is a transformational moment in the history of our company,” said Stephen Spengler, Chief Executive Officer of Intelsat (pictured). “Intelsat is the pioneer and foundational architect of the satellite industry. For more than 50 years, we have been respected for quality, innovation, sector leadership, and premium services. Our success has come despite being burdened in recent years by substantial legacy debt. Now is the time to change that.”
“We intend to move forward with the accelerated clearing of C-band spectrum in the United States and to achieve a comprehensive solution that would result in a stronger balance sheet. This 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 came into being in 1964, as part of the US Space Race and following the introduction of the US Communications Satellite Act in 1962. It was privatised in 2001.
“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,” Spengler added.
Source: electronicsweekly
