WASHINGTON — Satellite communications provider Speedcast is seeking to sell itself to one of its largest debt holders as a means of exiting Chapter 11 bankruptcy protection.
The Australian company filed for bankruptcy protection in April as the coronavirus pandemic weakened demand for its connectivity services to cruise lines, oil rigs and other customer platforms.
Speedcast said Aug. 13 that private investment management firm Centerbridge Partners of New York and London offered to pay $395 million to obtain 100% of the equity in the reorganized company.
Centerbridge, by Speedcast’s understanding, appears to have gained control of the majority of the company’s debt, alongside Black Diamond Capital Management, another financial institution, through debt trading during the bankruptcy proceeding.
Speedcast said the buyout has support of its official committee of unsecured creditors, but may run contrary to the desire of Speedcast’s debtor-in-possession financers, which sought an asset sale.
Those financers, which Speedcast did not name, committed $90 million in new money loans so Speedcast could continue operations while under bankruptcy protection.
Speedcast told the United States Bankruptcy Court for the Southern District of Texas that the terms of its debtor-in-possession financing contain “several provisions” its lenders could invoke to block the sale to Centerbridge.
Speedcast asked the court to determine the $395 million transaction will not violate the debtor-in-possession agreement.
Centerbridge has offered $220 million in new debtor-in-possession financing that would repay Speedcast’s earlier bankruptcy loan and that comes with better repayment terms, Speedcast said.
Through the Centerbridge buyout, Speedcast Chief Executive Peter Shaper and President Joe Spytek would stay as the company’s leadership, Speedcast said.