Credit & Capital

Intelsat Files for Bankruptcy

The satellite operator received $1 billion in debtor-in-possession financing to help it participate in an upcoming federal airwave auction.
Intelsat Files for Bankruptcy

Intelsat SA has filed for bankruptcy protection and obtained a commitment of $1 billion in debtor-in-possession financing to help it participate in an upcoming federal airwave auction in December.

The satellite operator, which is saddled with a debt of $14.5 billion, is turning to financial restructuring through Chapter 11 bankruptcy. It aims to take advantage of a planned Federal Communications Commission auction of spectrum, currently in use by satellite operators. The FCC wants to repurpose this spectrum for 5G networks.

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Intelsat stated that to meet FCC clearing deadlines and be eligible to receive $4.87 billion of accelerated relocation payments, it needs to spend more than $1 billion moving existing customers from airwaves, which must commence immediately.

According to the WSJ, Intelsat is struggling due to intense competition from rivals and slowdown in the airline and cruise ship segments. The company’s satellites are used to provide Wi-Fi services on planes and cruise ships.

SoftBank Group had tried to merge its U.S. Satellite firm OneWeb Global with Intelsat, but the bid was scuttled by Intelsat’s creditors.

The auction proceeds would only reduce Intelsat’s debt by a small fraction. The company’s subsidiary, Jackson Holdings SA, failed to make a $125 million interest payment last month, reported the WSJ.

Intelsat shares traded 2.91% higher at $0.81 in the after-hours session on Wednesday. The shares had closed the regular session 18% lower at $0.79.

This story originally appeared on Benzinga.

© 2020 Benzinga does not provide investment advice. All rights reserved.

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