Intelsat emerges from bankruptcy with more than half of debt slashed

By Sarah Lizee

Olympia, Wash., Feb. 23 – Intelsat SA announced Wednesday that it has completed and emerged from its financial restructuring process as a private company with a strengthened capital structure.

The company said its emergence follows the receipt of regulatory approvals, completion of corporate actions and satisfaction of other customary conditions.

Intelsat’s now effective plan of reorganization, supported by all creditor groups and confirmed by the U.S. Bankruptcy Court for the Eastern District of Virginia on Dec. 16, has reduced the company’s debt by more than half, to $7 billion from roughly $16 billion.

In connection with emergence, Intelsat obtained $6.7 billion in new financing consisting of a revolving credit facility, term loan and secured notes.

Supported by new equity owners, the company said it is now positioned for long-term success as it continues to innovate and bring new services to market.

Intelsat also has a new board of directors, composed of the company’s chief executive officer and six new directors, including Lisa Hammitt, Intelsat’s chairperson.

Plan terms

As previously reported, according to the company’s amended disclosure statement, the plan provides for the reorganization of the debtors as a going concern with a deleveraged capital structure and sufficient liquidity to fund the debtors’ post-emergence business plan and continue clearing activities to enable the debtors to be eligible for the accelerated relocation payments.

The debtors will fully repay its debtor-in-possession facility with proceeds from new debt.

Administrative claims will be paid in full, and priority tax claims will be paid in line with section 1129 of the bankruptcy code.

Holders of other secured claims will receive payment in full in cash, the collateral securing their claims, reinstatement of their claims or other treatment leaving their claims unimpaired.

Holders of other priority claims will receive payment in full in cash or other treatment leaving their claims unimpaired.

Intercompany claims and non-debtor intercompany claims will be reinstated or distributed, contributed, set off, settled, canceled and released or otherwise addressed.

Intercompany interests will be reinstated or discharged, canceled, released and extinguished with no distribution.

Holders of term loan facility claims will receive payment in full in cash, as compromised in line with the term loan facility claims settlement.

Holders of 8% and 9½% first-lien notes claims will receive payment in full in cash of their pro rata share of the full amount of all claims as compromised under a settlement, any accrued interest on the unpaid principal amount through the effective date at the contractual rate, and additional amounts, if any, in an amount sufficient to render the claims unimpaired.

Holders of convenience claims will receive payment in full in cash.

Holders of unsecured claims against Intelsat Jackson and the Jackson subsidiaries will receive their pro rata share of the Jackson unsecured recovery, which is 96% of new common stock, 100% of series A contingent value rights (CVRs), 67.5% of series B CVRs, $625 million of cash proceeds of new term loans and/or new notes. The new stock will be subject to dilution.

Holders of unsecured claims against Intelsat Connect Finance SA will receive their pro rata share of the ICF unsecured recovery, which is, after payment of restructuring expenses and professional fee claims, all remaining cash at Intelsat Connect Finance, 32.5% of series B CVRs, 4% of new common stock, 100% of new series A warrants, 46.447% of new series B warrants, and 30% of any distributions made by Intelsat on account of TopCo guarantee claims.

Holders of unsecured claims against Envision will receive their pro rata share of the Envision unsecured recovery, which is, after payment of restructuring expenses and professional fee claims, all remaining cash at Envision, provided that 70% of the cash will be distributed pro rata to holders of the Connect senior notes claims and 30% will be distributed pro rata to holders of the convertible senior notes claims; and 47.301% of the new series B warrants.

Holders of unsecured claims against Intelsat (Luxembourg) SA will receive their pro rata share of the Luxco unsecured recovery, which is, after payment of restructuring expenses and professional fees, all remaining cash at Intelsat (Luxembourg), and $10 million of the cash proceeds of the new debt.

Holders of unsecured claims against Intelsat Investments SA will receive their pro rata share of any cash remaining at Intelsat Investments.

Holders of unsecured claims against Intelsat Holdings SA will receive their pro rata share of all of the remaining cash at Intelsat Holdings.

Holders of unsecured claims against Intelsat Investment Holdings Sarl and TopCo guarantee claims against Intelsat Investment Holdings will receive their pro rata share of any remaining cash at Intelsat Investment Holdings.

Holders of unsecured claims against Intelsat will receive their pro rata share of the SA unsecured recovery, which is any remaining cash at Intelsat, $37.5 million in cash from the proceeds of the new debt, subject to payment of restructuring expenses and professional fees; 6.252% of the new series B warrants, provided that those new series B warrants will be subject to dilution; and 100% of the reorganized Intelsat common stock.

Holders of Topco guarantee claims against Intelsat will receive their pro rata share of the SA Unsecured recovery, provided that 30% of any distributions made on account of TopCo guarantee claims against Intelsat to the Jackson senior notes trustees will be gifted pro rata to holders of Connect senior notes claims in consideration for the covenants, compromises, releases, and other benefits provided by the members of the HoldCo creditor ad hoc group under the plan support agreement, provided that the total value of the gift will not exceed $6 million.

Interests in Intelsat will be diluted and extinguished by the equity distributions made under the plan, and holders will receive no distribution.

Intelsat is a Luxembourg-based satellite telecommunications company. The company filed bankruptcy on May 14, 2020 under Chapter 11 case number 20-32299.

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