Intelsat receives confirmation of Chapter 11 plan of reorganization

By Sarah Lizee

Olympia, Wash., Dec. 16 – Intelsat SA said the U.S. Bankruptcy Court for the Eastern District of Virginia confirmed its Chapter 11 plan of reorganization, according to a press release.

The company said it expects to emerge from the process in early 2022 upon receipt of regulatory approvals, completion of corporate actions, and satisfaction of other customary conditions.

Intelsat said the confirmed plan will reduce Intelsat’s debt by more than half, to $7 billion from about $16 billion, and position the company for long-term success as it innovates and brings new services to market.

The company said the plan was supported by all creditor groups across Intelsat’s capital structure following extensive negotiations and the ultimate consensual resolution of a multitude of complex issues.

Under the terms of the plan and with exit financing commitments already obtained, Intelsat is set to emerge as a private company, with the support of new equity owners, access to $7.875 billion in capital, and a significantly deleveraged balance sheet.

The company said it is well positioned to continue to reduce its debt upon receipt of $4.87 billion of accelerated relocation payments in connection with the C-band spectrum clearing project, with $1.2 billion of the total already approved by the Federal Communications Commission for anticipated receipt in January.

Plan terms

According to the 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.

Exit financing terms

Also previously reported, Intelsat is seeking court approval to borrow up to $7.88 billion under a DIP-to-exit financing package.

The package consists of a $500 million superpriority revolver fully syndicated by a group of bank arrangers, a $1 billion superpriority term loan A facility, of which $500 million will be syndicated by the bank arrangers and $500 million purchased by separate backstop parties, a $3.38 billion first-lien term loan B facility, of which $2.88 billion will be syndicated by the bank arrangers and $500 million will be purchased by the backstop parties, and $3 billion in secured senior notes, which will be fully backstopped by the backstop parties.

The bank arranger group consists of Barclays, Credit Suisse Loan Funding LLC, Deutsche Bank Securities Inc., Goldman Sachs Lending Partners LLC and JPMorgan Securities LLC.

The revolver will mature in five years and bear interest at Libor plus 225 basis points to 275 bps, subject to a 0% Libor floor and based on leverage. The rate will start at Libor plus 275 bps for the first fiscal quarter. There is a commitment fee that ranges from 25 bps to 50 bps, based on leverage, with the fee starting out at 50 bps for the first fiscal quarter. The revolver will have up to $500 million available for letters of credit and up to $75 million for swingline loans.

The term loan A facility will bear interest at Libor plus 275 bps, subject to a 0% Libor floor. The term loan B facility will bear interest at Libor plus 425 bps, subject to a 0.5% Libor floor.

Subject to the satisfaction of certain conditions, the financing will convert to an exit facility upon the debtors’ emergence from Chapter 11.

The company said the facilities are a key component of its overall restructuring efforts because they provide the debtors with the flexibility and liquidity necessary to fund the distributions under the plan, repay the outstanding pre-petition secured debt, refinance their $1.5 billion existing DIP facility, execute key operational tasks, including financing expenses related to their C-band clearing efforts, and fund their business plan through and following emergence.

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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