SpeedCast Files Bankruptcy With Cruise and Oil Customers Reeling
(Bloomberg) -- Satellite communication provider SpeedCast International Ltd. filed for Chapter 11 bankruptcy after a collapse in oil prices and the halting of cruise-industry operations squeezed many of its biggest customers.
SpeedCast, headquartered in Australia, will likely seek to re-shape its balance sheet and attain fresh cash during its bankruptcy, a representative said in an emailed statement. The process is expected take about six months.
The company has commitments from current lenders for a $90 million bankruptcy loan, according to a separate statement. The bankruptcy filing doesn’t include SpeedCast’s government-business entities, which provide communication and reconnaissance platforms to the U.S. and others, according to company statements and a court declaration from Chief Restructuring Officer Michael Healy.
Pressures facing SpeedCast’s customers in the energy and maritime industries, coupled with cruise-industry challenges, derailed the company’s planned equity raise outside of court, according to the statement. The company is operating normally and intends to honor customer and employee commitments.
SpeedCast provides satellite communication technology to companies operating in remote locations around world. The company serves about 50% of ocean-going cruise ships globally, Healy said. A three-year contract with Carnival Corp. was expected to account for as much as 9% of SpeedCast’s 2019 revenue, according to a statement at the time.
The company was under pressure before coronavirus gripped the global economy. S&P Global Ratings slashed SpeedCast’s credit grade deeper into junk in February, citing limited cash availability and “persistent weak operating conditions.” SpeedCast then skipped a payment that was due March 31 on its $600 million term loan.
SpeedCast owes millions to other satellite companies, including about $45 million to Intelsat, court papers show. Intelsat recently skipped a debt payment and is seeking bankruptcy financing, Bloomberg previously reported.
SpeedCast listed assets and liabilities of as much as $1 billion each in its bankruptcy petition. It generated $722 million in revenue in 2019, but posted net losses totaling about $460 million, Healy said.
Weil, Gotshal & Manges LLP and Herbert Smith Freehills LLP are SpeedCast’s legal counsel. FTI Consulting Inc. is its financial and operational adviser. Moelis & Co. is its investment banker.
The case is SpeedCast International Limited et al., 20-32243, U.S. Bankruptcy Court for the Southern District of Texas
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