Cruise ship satcoms provider, Speedcast International Limited has initiated a voluntary financial restructuring under Chapter 11 of the US Bankruptcy Code.
This came after the company evaluated a variety of options to strengthen its balance sheet in ways that support its long-term growth and success.
In conjunction with chapter 11 petitions filed on behalf of Speedcast and certain of its US and international subsidiaries, the company also announced that it has received a commitment for up to $90 mill in debtor-in-possession financing from the holders of its outstanding term loan debt, which combined with its existing cash flows, will help to ensure it is able to meet its commitments to all stakeholders throughout the restructuring going forward.
None of the entities associated with the company’s government business entities (UltiSat, Globecomm Systems. and all associated entities) have filed for Chapter 11 relief. These entities are fully financially independent and continue to operate and generate sufficient cash flow to support their operations, Speedcast claimed.
The company also stressed that all entities – regardless of their status in the chapter 11 process – are operating and serving customers as usual. The company fully intends to uphold its commitments to its customers and employees, and to pay suppliers in the normal course of business for all goods and services delivered to any Speedcast entity.
“The decisive actions we announced are about strengthening our financial position through the proven legal framework that the chapter 11 process provides – and we are confident we will be well positioned to maximize the full potential of our expanded platform as a result of the actions we’re taking now to align our balance sheet strength with our clear industry leadership,” said Peter Shaper, Speedcast’s CEO and Executive Director. “We fully expect that our customers and employees, among other stakeholders, will see no change in their interactions with our company as a result of this filing. In fact, we expect to be a stronger business partner and employer as result of the additional financing our existing lenders have committed, based on their strong belief in our go-forward potential.”
The impact on Speedcast’s business was further exacerbated as the COVID-19 pandemic spread worldwide and halted activities for Speedcast’s cruise line customers. These dynamics made it impossible for Speedcast to complete its planned equity raise – or any recapitalisation transaction – outside of the Court-supervised chapter 11 process.
Chapter 11 provides a legal framework through which Speedcast will work with creditors and other stakeholders to develop a Plan of Reorganisation that specifies how the company will reduce its debt and gain access to new sources of liquidity. Speedcast said it planned to emerge from the process this year and hopes to have it completed within six months.
Speedcast is being advised by Weil, Gotshal & Manges as global legal counsel and Herbert Smith Freehills as co-counsel. FTI Consulting is Speedcast’s financial and operational advisor. Moelis Australia Advisory and Moelis & Company are Speedcast’s investment bankers.
****It has just been announced that Intelsat has been declared bankrupt.