Quilty Analytics has given the recent Chapter 11 bankruptcy protection over Speedcast a close look. Speedcast entered Chapter 11 under ‘debtor in possession’ restructuring rules on April 23rd.
Speedcast was spun out of AsiaSat back in 2012 and thanks to an aggressive M&A policy has grown to be the largest satellite communications service provider in the world. It bought Harris CapRock for $425 million, UltiSat (about $100 million) and Globecomm ($135 million).
Speecast’s revenues last year were $722 million.
Quilty points out that the major satellite operators (Intelsat, SES, Eutelsat, etc.) received around $300 million in contracted spectrum orders last year (not all of which have been paid) from Speedcast and equal to some 6 per cent of the satellite industry’s overall bandwidth sales when Video is excluded.
“[Speedcast] executed an aggressive M&A campaign with 16 acquisitions since its spin-out from AsiaSat in 2012. After its most recent acquisition, Globecomm, acquired in 2018 for $135 million, the Company’s public equity holders put the Company “in the penalty box.” Consequently, Speedcast spent most of the year of 2019 working to improve its operations and to integrate its past acquisitions. These efforts were perhaps too little, too late, with Speedcast facing a liquidity crunch and non-compliance with its debt covenants by early 2020,” states Quilty.
More positively, Quilty adds: “We believe that Speedcast’s new management team, installed in February 2020, would have succeeded in righting the ship out of court had it not been for the Covid-19 crisis, which will severely impact two of Speedcast’s key end-markets (cruise and to a much lesser extent energy) while at the same time seriously disrupting the capital markets. Instead, Speedcast has sought Chapter 11 bankruptcy protection to restructure.”