Speedcast International Limited, a major provider of satellite connectivity to the cruise industry, has filed for a voluntary financial restructuring under chapter 11 of the United States Bankruptcy Code.
Speedcast also announced that it had received a commitment for up to $90 million in new money debtor-in-possession 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 company said it intends to uphold its commitments to its customers and employees, and to pay suppliers in the normal course of business for all goods and service.
“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’re taking now to align our balance sheet strength with our clear industry leadership,” said Peter Shaper, Speedcast Chief Executive Officer and Executive Director. “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. In fact, 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.”
The financial restructuring the company is now undertaking will allow Speedcast to overcome the near-term headwinds it is facing as a result of pressures on its customers’ businesses. A significant percentage of the company’s customers are in the maritime and oil and gas industries and have extended payment terms as they work to overcome significant industry pressures, Speedcast said, in a press release.
The impact on Speedcast’s business was further exacerbated as the COVID-19 pandemic spread worldwide and halted activities for Speedcast’s cruise line customers. These dynamics made it impossible for Speedcast to complete its planned equity raise – or any recapitalization transaction – outside of the Court-supervised chapter 11 process, the company said.