Intelsat to renegotiate debt
August 14, 2020
Intelsat filed for Chapter 11 reorganisation on May 13th, and more details are now emerging as to how it hopes it can restructure its debts and financial obligations.
Bankruptcy protection means it does not have to pay interest on its unsecured debts, and a saving of some $102 million each month. But it has to pay interest on secured debts.
It is also crucial that Intelsat reaches agreements with key creditors which includes satellite builders such as Maxar Technologies and Northrop Grumman. Northrop Grumman, for example, has built two Mission Extension Vehicles (so-called ‘space rescue tugs’) for Intelsat, one of which is due for launch on August 14. Intelsat needs to stay on good terms with these vital suppliers in order to secure delivery of future satellites now on the productions line for the satellite operator.
Intelsat is due to deliver its proposed C-band transition plan to the FCC on August 14th.
On August 10th, in a filing to the Bankruptcy Court, Intelsat asked for permission to send a standard letter to each of its approximately 4000 supplier contracts (its “omnibus objections to claims”) and to approve the standardised form letter which would be sent to every supplier.
“The Debtors submit that the information provided on the Rejection Notices and Assumption Notices will provide the Court and interested parties with sufficient information to establish that the Debtors are entitled to make such a rejection, assumption, or assumption and assignment (and any amendments thereto) in their sound business judgment. Accordingly, the Court should approve the Contract Procedures,” stated the filing.
Intelsat has already declared that it has some $6.4 billion in supplier contracts, and that some 92 per cent are non-cancellable. The remainder are subject to cancellation fees.