Satellite communications company Intelsat S.A. (NYSE: I) and certain of its subsidiaries have filed Chapter 11 petitions in the U.S. Bankruptcy Court for the Eastern District of Virginia, Richmond Division. The move is ostensibly to position the company to participate in upcoming Federal Communications Commission (FCC) C-Band spectrum “clearing” related to the support of 5G wireless services. Intelsat General (IGC), which serves U.S. commercial, government, and allied military customers, is not part of the bankruptcy proceedings. Intelsat asserts the move will not affect its current operations.
Intelsat says it has a commitment for $1 billion of new financing. Subject to approval of the court, this debtor-in-possession financing, combined with its cash on hand and cash flow generated from business operations, will provide enough liquidity to support ongoing operations, fund the upfront costs associated with participating in the C-band clearing, and continue investments in expanding its business, according to the company. To meet the FCC’s accelerated clearing deadlines and ultimately be eligible to receive $4.87 billion of accelerated relocation payments, Intelsat says it must spend more than $1 billion on clearing activities, which “must start immediately.”
“This is a transformational moment in the history of our company,” said Stephen Spengler, CEO of Intelsat. “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.”
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