Intelsat gets bankruptcy court approval to exit Chapter 11 in early 2022
TAMPA, Fla. — Intelsat is poised to exit Chapter 11 in early 2022, after its bankruptcy court approved a restructuring plan that cuts the satellite operator’s debt from about $16 billion to $7 billion.
The approval from the U.S. Bankruptcy Court for the Eastern District of Virginia marks the final court milestone for a Chapter 11 process that started in May 2020.
Intelsat CEO Stephen Spengler said the company now stands to emerge from Chapter 11 early next year, following regulatory approvals and securing the financing laid out in the restructuring plan to recapitalize the business.
He said the bankruptcy court approval came after the plan gained support from all creditor groups across Intelsat’s complex capital structure.
Broad support came after satellite operator SES agreed to drop its opposition to the restructuring plan, in return for changes to how Intelsat distributes assets across Intelsat entities post-bankruptcy.
The changes were made amid legal action SES has lodged against Intelsat over how C-band clearing proceeds should be divvied up among satellite operators.
“If SES prevails on its claims, Intelsat will be obligated to make payment to SES in accordance with distributions provisions in the Amended Plan of Reorganization,” said Suzanne Ong, vice president of external communications at SES.
SES also agreed to waive its demand for punitive damages as part of the negotiation.
A court hearing on SES’ claim is scheduled to start Feb. 7.
Intelsat said it is in line to reap nearly $5 billion in total proceeds from clearing C-band spectrum, which the company said will help reduce its debt.
After meeting a key regulatory deadline for clearing part of the spectrum, the operator expects to receive $1.2 billion of these proceeds in January.
Returning to growth
Intelsat will emerge as a private company with former bondholders as equity owners under the restructuring plan.
Spengler said PIMCO, a U.S. investment management firm, is set to be Intelsat’s largest shareholder post-bankruptcy with a stake of about 30%.
According to Spengler, who plans to retire shortly after the company exits Chapter 11, the restructuring plan “creates a much different Intelsat with a strong financial foundation and financial flexibility for the future, and it positions us well to participate fully in the marketplace” and invest in a “fully software-defined network based around 5G technology.”
Samer Halawi, Intelsat’s executive vice president and chief commercial officer, discussed the company’s plans for 10 software-defined satellites in an October SpaceNews interview.
The company has issued a request for proposals (RFP) for the satellites as part of a multi-orbit growth strategy that could also include its own low Earth orbit broadband constellation.
Halawi recently announced plans to resign from Intelsat at the end of the year.