Speedcast files for Chapter 11 bankruptcy

July 2020 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

July 2020 Issue

After evaluating a variety of options to strengthen its balance sheet in ways that support its long-term growth and success, satellite communication provider Speedcast International Limited, and a number of its US and international subsidiaries, is to recapitalise through Chapter 11 bankruptcy.

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 has also received a commitment for up to $90m in debtor-in-possession (DIP) 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 go-forward commitments to all stakeholders throughout the restructuring.

The financial restructuring Speedcast is now undertaking will allow it to overcome the near-term headwinds it is facing as a result of pressures on its customers’ businesses. A significant percentage of Speedcast’s customers are in the maritime and oil and gas industries and have extended payment terms as they work to overcome significant industry pressures.

The pressure on Speedcast’s business was further exacerbated as the COVID-19 pandemic spread worldwide and halted activities for the company’s cruise line customers. These dynamics made it impossible for Speedcast to complete its planned equity raise – or any recapitalisation transaction – outside of the Chapter 11 process.

“The decisive actions we announced today 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 are taking now to align our balance sheet strength with our clear industry leadership,” said Peter Shaper, chief executive and executive director of Speedcast. “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.”

Furthermore, all Speedcast entities – regardless of their status in the Chapter 11 process – are operating and serving customers as usual. Speedcast 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.

Founded in 1989, Speedcast is the world’s largest remote communications and IT services provider. The company delivers critical communications solutions through its multi-access technology, multi-band and multi-orbit network of 80-plus satellites and an interconnecting global terrestrial network, bolstered by extensive local support from over 40 countries.

Furthermore, Speedcast provides managed information services with differentiated technology offerings, including cyber security, crew welfare, content solutions, data and voice applications, Internet of Things (IoT) solutions and network systems integration services. The company serves more than 3200 customers in over 140 countries in sectors such as maritime, energy, mining, enterprise, media, cruise, humanitarian and government.

Advising Speedcast throughout the Chapter 11 process as global legal counsel is Weil, Gotshal & Manges LLP. Herbert Smith Freehills LLP is acting as co-counsel. FTI Consulting, Inc. is Speedcast’s financial and operational adviser, while Moelis Australia Advisory Pty Ltd and Moelis & Company LLC are Speedcast’s investment bankers.

Mr Shaper concluded: “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.”

Fraser Tennant