Intelsat confident on addressing upcoming bond, loan maturities

By Paul Deckelman

New York, July 27 – Intelsat SA has a sizable debt load, including several billion dollars’ worth of bonds and a term loan coming due over the next several years.

But the Luxembourg-based communications satellite company is not worried about meeting those obligations, according to its chief financial officer.

Jacques D. Kerrest, who also serves as the company’s executive vice president, told analysts on a Thursday conference call following the release of Intelsat’s results for the 2017 second quarter ended June 30 that “as you know, we have dealt with the 2018 maturity last year,” when it took out more than $403 million of its then-outstanding Intelsat (Luxembourg) SA $500 million 6¾% senior notes due 2018 via an exchange offer for a like amount of newly issued 12½% senior notes due 2024.

That left some $96.65 million of the 6¾% notes still outstanding at June 30, and Kerrest declared that “we have the funds at Luxembourg to pay off that maturity in June of next year.”

During the question-and answer portion of the conference call following a formal presentation of the results by Intelsat’s chief executive officer, Stephen Spengler, CFO Kerrest – addressing a question from an analyst as to what it intends to do about its maturities over the next several years – noted that the company had also addressed its $1.5 billion of outstanding 7¼% senior notes due 2019.

Its Intelsat Jackson Holdings SA subsidiary visited the junk bond market in later June, selling $1.5 billion of new 9¾% senior notes due 2025, which priced at par in a quick-to-market transaction on June 19. Proceeds from that bond sale, plus cash on hand, will be used to repay the 7¼% notes.

Kerrest said that Intelsat acted when it did “because we believed the market was good for us.” Noting that the 2019 notes would mature early in that year – in April – he said that “we believed that it was the right time to do it.”

Term loan, 2020 bonds not a worry

Looking a little further down the road, Kerrest said that Intelsat’s $2.2 billion of 7¼% senior notes due 2020 would be coming due in the last part of that year, giving the company some breathing room as it decides how to meet that maturity.

“If you look at 2020, we’re talking about October of 2020 – so it’s 18 months after the 2019, and we have a couple of years until that maturity comes up.

“So we will obviously study the market and be opportunistic when we can, and refinance it when the market is available.”

Turning to outstanding bank debt, the CFO said that Intelsat’s “other” 2019 maturity is $3.09 billion of term loan debt at Intelsat Jackson due in June of that year.

“It is part of the secured part of the balance sheet. We are at [a leverage ratio of net debt as a multiple of 12 month trailing adjusted EBITDA] less than 3 times EBITDA on a secured basis, and we will not have any problem to refinance this.”

Kerrest said of the loan that “our margin at this time of 275 basis points is very attractive, and we continue to look at market conditions and we will do something when we think it is appropriate.”

According to the company’s latest 6-K filing with the Securities and Exchange Commission, as of June 30, Intelsat’s balance sheet showed some $14.22 billion of total debt, consolidating the debt held at its Luxembourg, Jackson and Intelsat Connect Finance units with the parent company.

That consisted of $14.12 billion of long-term debt and $96.482 million current portion.

Debt was up from $14.2 billion of total debt at the end of fiscal 2016 on Dec. 31 of that year, all of which was classified as long-term, with no current portion.

Cash and equivalents at June 30 stood at $508.843 million, down from $666.024 million at Dec. 31.

© 2015 Prospect News.
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