Satellite operator Intelsat, which launched the world’s first commercial communications satellite Intelsat 1 in 1965, filed for Chapter 11 bankruptcy in Richmond, VA on Wednesday, May 13 in order to ease a multibillion-dollar debt and join an FCC spectrum clearing program.
In a statement Wednesday, Intelsat representatives said the bankruptcy filing was spurred, in part, by 5G communications.
“One of the primary catalysts for restructuring the balance sheet now is Intelsat’s desire to participate in the accelerated clearing of C-band spectrum under the Federal Communications Commission order in support of a build-out of 5G wireless infrastructure in the United States. To meet the FCC’s accelerated clearing deadlines and ultimately be eligible to receive $4.87 billion of accelerated relocation payments, Intelsat needs to spend more than $1 billion on clearing activities. These clearing activities must start immediately, long before costs begin to be reimbursed. The Company is also managing the economic slowdown impacting several of its end markets caused by the COVID-19 global health crisis.
“This is a transformational moment in the history of our company,” said Stephen Spengler, Chief Executive Officer of Intelsat. “Intelsat is the pioneer and foundational architect of the satellite industry. For more than 50 years, we have been respected for quality, innovation, sector leadership, and premium services. Our success has come despite being burdened in recent years by substantial legacy debt. Now is the time to change that. We intend to move forward with the accelerated clearing of C-band spectrum in the United States and to achieve a comprehensive solution that would result in a stronger balance sheet. This will position us to invest and pursue our strategic growth objectives, build on our strengths, and serve the mission-critical needs of our customers with additional resources and wind in our sails.”
To facilitate the financial restructuring, Intelsat and certain of its subsidiaries have filed voluntary Chapter 11 petitions in the U.S. Bankruptcy Court for the Eastern District of Virginia, Richmond Division. Intelsat General (IGC), which serves the Company’s U.S. commercial, government, and Allied military customers, is not part of the Chapter 11 proceedings.”
Intelsat is one of the world’s largest satellite operators, providing media services to BBC, 21st Century Fox, and the Walt Disney Company, in addition to servicing telecommunications operators, ISPs, and the U.S. government and military. The company also provides broadband services for passengers of airlines and cruise ships. Intelsat is seeking bankruptcy relief in part due to the COVID-19 pandemic and a decrease in revenues from the broadband service businesses.
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