Intelsat’s C-band “bankruptcy loan”
April 14, 2020
By Chris Forrester
Intelsat has been somewhat silent on its intentions regarding the planned auction by the FCC of 280 MHz of spectrum over the US to help support the take-up of 5G telephony and data.
However, Bloomberg Law reports that Intelsat is seeking a bankruptcy loan in order to keep the satellite company in business under a Chapter 11 court protection while it waits for the FCC’s disbursement of around $5 billion from the planned spectrum auction later this year.
Bloomberg says that Intelsat has appointed JPMorgan Chase & Co is seeking the cash under ‘debtor in possession’ Chapter 11 rules to institutional investors “according to people with knowledge of the plans”. The loan – said to be of some $750 million – would help fund improvements to Intelsat’s spectrum ahead of the FCC auction.
Intelsat’s position is not helped by a number of legal actions already underway. Top of the list is that of David Hepper’s hedge fund Appaloosa (7.4 per cent investors in Intelsat) which has urged Intelsat to renegotiate the terms of the FCC’s auction and compensation solution. Or else to liquidate. There are also a number of Class Actions building up against two key Intelsat shareholders.
One close industry observer, speaking to Inside Satellite, said that Intelsat has no choice other than to accept and participate in the FCC’s overall spectrum scheme. “Because the FCC is taking their frequencies whether they like it or not. The question for Intelsat is whether they will commit to expedited relocation from or evacuation of the lower 300MHz of C-band (3.7-4.0 MHz) and to coordinate the job of getting their earth station partners/customers to do the same. If they just go along, they will be reimbursed for their expenses, including new satellites, ground station equipment for their gateways and TT&C stations, and to pass along to their earth station partners. If they commit to expedited evacuation, which removes their use of those 300MHz by December 2023, then they will get incentive payments ESTIMATED by the FCC of close to $5 billion. But that number is dependent it seems on what the mobile folks pay for those frequencies. Given its debt, Intelsat has almost no choice but to commit to do it.”
A Chapter 11 bankruptcy further complicates matters, to say the least.