Intelsat’s Plan to Emerge from Chapter 11 Would Cut Debt By Half
Intelsat has reached a plan supported by some of its creditors to emerge from Chapter 11 bankruptcy with its debt cut by more than half – from nearly $15 billion to $7 billion.
Intelsat has filed a plan of reorganization after negotiations with creditors. According to the plan, 95% of the company’s new shares will go to Intelsat Jackson unsecured debt holders. The company said in a Feb. 12 announcement that the plan has the support of holders of approximately $3.8 billion of the company’s funded debt. The company has requested a hearing on March 17, 2021 to seek court approval of the disclosure statement and establish procedures to solicit votes on the plan.
Intelsat filed for Chapter 11 on May 13, 2020, in order to restructure its debt so that it could participate in the FCC’s C-band clearing initiative and receive accelerated relocation payments for doing so. Intelsat is eligible to receive $4.87 billion, about half of the total payments, in addition to relocation cost reimbursement.
“The plan provides for the reorganization of the debtors as a going concern with a deleveraged capital structure and sufficient liquidity to fund the debtors’ post-emergence business plan and continued clearing activities to enable the debtors to be eligible for the accelerated relocation payments,” the disclosure statement reads.
Intelsat expects to emerge from Chapter 11 in the second half of 2021.
The disclosure agreement also addresses the ongoing dispute between Intelsat and SES, in which SES filed a claim for $1.8 billion, alleging Intelsat breached fiduciary duties as part of the C-Band Alliance (CBA). Intelsat has disputed the claim. According to the disclosure statement, the trial on the SES proof of claim has been scheduled to be heard by the bankruptcy court beginning on June 28.
“While the ultimate resolution of the claim is not currently predictable, if there is an adverse ruling, the ruling could have the effect of significantly diluting the recoveries of certain holders of claims against the debtors,” the disclosure statement reads.