Intelsat’s last-minute set of reorganisation agreements, the 6th Supplemental Declarations, as part of its Exit Plan reached on December 16th with some of its – relatively modest – remaining creditors should now enable the satellite operator to fully emerge from bankruptcy early in the New Year.
There are some legal hurdles ahead, not least the on-going and long-running litigation between SES and Intelsat over how the FCC’s incentive payments are divided between the two satellite rivals. SES wants a 50/50 division. It had been asking for punitive extra damages but that action was dropped a few days ago. The court trial between Intelsat and SES is scheduled to open on February 7th.
Exiting from bankruptcy reconstruction will also see Intelsat slash its indebtedness from about $16 billion to nearer $7 billion. The process will have cost the company more than $200 million in legal costs, special advice and complex arbitration fees.
Intelsat’s financial restructuring has put in place new equity finance worth some $7.875 billion. The operator will also receive a total of $4.87 billion from the FCC (subject to the above litigation with SES). In January Intelsat will receive the first portion of that FCC money, worth about $1.2 billion.
“If SES prevails on its claims, Intelsat will be obligated to make payment to SES in accordance with distributions provisions in the Amended Plan of Reorganization,” said Suzanne Ong, VP/external communications at SES, after the court hearing.
Exiting will also see the departure of CEO Steve Spengler, perhaps – and understandably – happy to put his feet up for his retirement. His legacy will be a ‘clean sheet’ privately-held business with PIMCO investment management expected to be the largest equity holder. PIMCO has some $2.2 trillion of assets under management.
The next set of hearings are currently scheduled for January 6th when Judge Keith Phillips will hold an ‘Omnibus’ session.