Intelsat has a plan to emerge from its Chapter 11 bankruptcy protection. It involves slashing debt owed by more than half, from $15 billion to $7 billion. But the debtors must agree to those losses. If not, the company faces a more dire outcome, including the likely liquidation of its recently acquired Gogo Commercial Aviation business.
For us to really deliver the services that are required for customers and really to maximize that customer experience and give the airlines what they need in terms of the right economic model and service for their for their passengers a vertical integration was was absolutely desirable and required.– Intelsat CEO Stephen Spengler
The company filed its exit plan with the US Bankruptcy court, describing in detail what the restructured operation will look like and how it expects to make money going forward. Mobility dominates the story.
The Mobility segment splits into sub-segments including wholesale transponder services and managed services such as FlexMaritime, Commercial Aviation, and FlexMove. Over the next five years the Mobility segment is expected to increase to ~43% of total revenue while nearly doubling in absolute terms against a shrinking Media (i.e. TV channels) and Network divisions business.
This helps to explain the willingness of Intelsat to spend $400 million while undergoing the reorganization to secure those assets and customers.
But that recovery is not immediate. If the debt restructuring is not approved Intelsat’s dalliance with the Gogo Commercial Aviation business will be a very, very short one.
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Intelsat’s exit plan comes after extensive negotiations with the Company’s creditors and resolves a multitude of complex issues among them. Companies holding approximately $3.8 billion of the Company’s funded debt endorse the proposal and have executed a Plan Support Agreement that binds their support for the Company’s Plan. Negotiations with additional debt-holders are on-going.
The Company is requesting a hearing on March 17, 2021 to seek Court approval of the Disclosure Statement and establish procedures to solicit votes on the Plan.
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