To court for a loan
Intelsat, positioning itself as the world’s largest satellite communications operator and having the largest fleet of private telecommunications satellites in the world, has filed with a number of its subsidiaries (35 companies in total) in the federal court of the eastern district of Richmond (Virginia, USA), with a voluntary petition under Chapter 11 of the United States Bankruptcy Code.
The main purpose of applying to the court is financial restructuring in order to continue the work and financial operations. Subject to bankruptcy protection against creditors, the operator, subject to court approval, hopes to use the $ 1 billion at its disposal in conjunction with the generated cash flow for debt restructuring and timely authorization from the Federal Communications Commission (FCC) to bid on C-band frequencies to deploy 5G wireless infrastructure in the United States .
Intelsat expects to gain $ 4.87 billion for frequencies Earlier, on April 15, 2020, Intelsat missed the mandatory interest payments on a number of its debt obligations. A bankruptcy petition was filed the day before the expiration of the 30-day grace period for these payments. The company’s financial difficulties have arisen in connection with the ongoing reorganization of the business, as well as “in connection with the economic crisis caused by the coronavirus pandemic,” an Intelsat official statement said.
Currently, Intelsat accounts payable are estimated at $ 14.5 billion, according to The Wall Street Journal. During the COVID-19 pandemic, Intelsat’s main revenue stream comes primarily from satellite communications contracts for civil aviation, cruise ships and oil rig infrastructure, significantly reduced. The stock price of the company since the start of the pandemic has fallen by 89%.
Sell, otherwise, it will be in vain
Based on the results of public tenders, Intelsat expects revenue from the sale of frequencies released by it in the amount of about $ 4.87 billion. terrestrial and satellite communications
Disconnecting some Intelsat customers from satellite broadcasting and transferring to other frequency sections is estimated at $ 1 billion. At the end of the auction, the state will compensate Intelsat for this amount if the company can find the funds to clear the band and manage to take part in it.
The Intelsat General (IGC) division, which is responsible for the company’s government, corporate, and army contracts, is not included in the bankruptcy procedure.
Filing a bankruptcy application will not affect Intelsat operations and customers, the company said in a statement. The launch of new satellites, investments in ground-based infrastructure, the development of new services and the development of next-generation Intelsat networks will continue as normal.
The 5G frequency auction is held by the United States Federal Communications Commission (FCC). The regulator intends to convert part of the frequency range used by satellite operators to the deployment of 5G networks in the United States .
The 5G Spectrum Act of 2019, adopted in the USA at the end of 2019, ended the earlier practice of holding closed auctions for the sale of C-band frequencies. From now on, operators are forced to sell frequencies at public auctions, while giving part of the FCC revenue.
Intelsat shares began to fall back in the fall of 2019, during the passage of the 5G Spectrum Act of 2019 in the U.S. Congress. An additional blow to the company’s business was the coronavirus pandemic.
Satellite operator with 55 years of history
Intelsat (The International Telecommunications Satellite Organization, ITSO, INTEL-SAT, INTELSAT) was founded in 1964 as an interstate organization with headquarters in Luxembourg. In 2001, Intelsat was transformed into a private company, in 2015 it was reorganized into Intelsat Corporation with jurisdiction in the state of Delaware and is headquartered in Tucson Corner, Virginia (USA).
The Intelsat orbital constellation has about 50 telecommunication satellites (55 satellites as of April 2013. According to Intelsat, its staff employs about 1,100 employees, the number of customers is about 1,500 companies and organizations.
