Giant satellite operator Intelsat is offering a $141.8 billion (€127.2bn) bond exchange, and in the process cutting its interest payments and reducing its debt burden. It is the latest stage in a comprehensive debt restructuring that has been on-going for some months.

Normally, one would expect shareholder support for any scheme that saw interest payments reduced, but a report from equity analysts at Citigroup Global Markets was negative. “Intelsat has nearly exhausted its debt capacity,” the analysts stated. This helped drive Intelsat’s share price down a thumping 9.94 per cent (to $2.81).

Recent comments from Standard & Poor’s Global Ratings described the restructuring as “distressed” and “tantamount to default”.

The current offering is $120 in cash ($100 after September 12th) and $705 in 8 per cent notes due 2024 for each $1,000 of its existing 6.625 per cent notes due December 2022, and it says it’s seeing agreed participation from holders of $78.4 million of the old notes. The 2022 notes were trading at 73.75 cents on the dollar, so the bond swap is beneficial for bond-holders.

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