On 13 May 2020, it was announced by Intelsat – one of the primary FSS operators globally – that it had entered into Chapter 11 bankruptcy protection in a Court in the USA. This move is being described by the company as a “financial restructuring” process. This new status, which protects the company from its creditors, was triggered by the willing default by Intelsat on a debt bond which came due in April. This was followed by a 30-day grace period.

 

 

While the financial failure of Intelsat has been predicted by industry experts for many years, largely due to the company’s historical poor balance sheet and its US$14 billion debt mountain, this this move is actually more voluntarily strategic rather than being forced. It allows the company to make a financial restructuring which enables it to claim US$4.87 billion in incentive/compensation payments offered by the US FCC to encourage select operators to clear a portion of the C-band spectrum over the USA. Intelsat found itself restricted by debt-covenants which prevent it from spending what was required on new spacecraft and terminals in order to qualify for these incentive payments.

Alongside its new Chapter 11 status, Intelsat announced that it had lined up US$1 billion in financing enabling the company to support ongoing operations and begin funding the upfront clearing costs. This new financing will have to be approved by the Court before Intelsat can benefit from it however.

Comment by Matthew Wilson: A significant part of the upcoming C-band clearing costs involves having to order new satellites to operate in the reduced C-band environment. With this knowledge, the sudden, large – US$700 million – increase in unidentified backlog for US-manufacturer Maxar, becomes slightly clearer. This was reported by Maxar on 11 May.

It is however, uncertain whether Intelsat is solely or partially responsible for this, considering the company would have been unable to sign any firm contracts before entering Chapter 11. Despite this Maxar, may have remained confident enough that it would receive a multi-sat order from them in the near future to include this on their books. There also remains the chance that FCC incentive payment colleague/competitor SES, may have placed this order to support its own C-band clearing process.