Satellite firm Speedcast files for bankruptcy protection in US

Australian satellite firm Speedcast, which services cruise ships and oil rigs, has filed for bankruptcy protection in the US.

Speedcast connects cruise ships and oil rigs to internet and phone services.

Speedcast International, an Australian satellite-communications company that connects cruise ships and oil rigs to internet and phone services, has filed for bankruptcy protection in the US, as the energy downturn and the coronavirus pandemic wipes out much of its business.

The Sydney-based company sought chapter 11 protection in US Bankruptcy Court in Houston because it is running out of cash.

Speedcast executives and advisers had been in talks since last month with a group of lenders on a debt-for-equity swap, but the rapid decline in demand for its services as a result of the OPEC price war and collapse of cruise-ship tourism meant the company had to seek refuge in bankruptcy court before a restructuring deal could be completed, according to court papers.

The company has only $US30 million in cash on hand, the bulk of which is already pledged to its lenders, Michael Healy, its restructuring chief, said in a declaration filed with the court.

A group of lenders, with Credit Suisse as agent, has agreed to provide Speedcast with a bankruptcy loan of $US180 million to keep its business open during the chapter 11 case. Only about half of that is new money, however, with some $US90 million earmarked for lenders to pay off prebankruptcy debt.

Without the financing from its lenders, Speedcast would run out of cash by Monday, Mr Healy said.

Speedcast brought in $US722.3 million in revenue in 2019. It posted a net loss of $US459.8 million, mainly due to impairment charges and writedowns totalling $US413.8 million, according to court papers. The company recorded a net loss of $US6.8 million for the previous year on revenue of $US611.9 million

Speedcast, which has some $US689 million in debt, skipped an interest payment last month. Its lenders had agreed not to call a default as the company considered its restructuring options. That forbearance pact was set to end Friday.

The company owes millions to a number of vendors it contracts with for satellite and wireless bandwidth. That includes at least $US44 million owed to satellite company Intelsat.

Speedcast’s advisers include law firms Weil, Gotshal & Manges and Herbert Smith Freehills along with restructuring firm FTI Consulting and investment bank Moelis & Co. The ad hoc lending syndicate is being advised by Davis Polk & Wardwell; Greenhill & Co; Skadden, Arps, Slate, Meagher & Flom; and King & Wood Mallesons.

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