Speedcast International Limited, a major provider of satellite connectivity to the cruise industry, has announced that its plan of reorganization has been confirmed by the U.S. Bankruptcy Court for the Southern District of Texas
According to a press release, this confirmation definitively clears the path for the company to successfully complete the Chapter 11 process after receiving final regulatory approvals and satisfying customary closing conditions, which is expected by the end of the first quarter of 2021.
The company stated that it is poised to emerge with a significantly strengthened balance sheet and the support of Centerbridge Partners and its affiliates as its new owner.
“The Court’s confirmation of the plan marks a key milestone in the company’s efforts to become a stronger business and positions us to emerge in the near term, having achieved our goals,” said Chair of Speedcast Stephe Wilks.
“Throughout the restructuring process, the company’s global workforce has delivered on its commitments while adapting to change. On behalf of the board, we are immensely grateful for the ongoing patience and trust that the company’s employees, customers and partners have shown in this process,” he added.
Under the structural changes, Joe Spytek – who served as Speedcast’s president and chief commercial officer since the company filed for Chapter 11 – will take on the role of Speedcast’s chief executive officer, leading the company upon emergence under the new Centerbridge ownership.
Under the terms of the plan, Speedcast is set to emerge with a new $500 million equity investment from Centerbridge, which will be used in part to repay all of its $285 million debtor-in-possession financing, as well as a permanent reduction of all of the $634 million senior secured debt of the Company.
The plan also provides for, among other things, a cash payment to holders of secured claims and cash payment to certain of Speedcast’s critical trade vendors. Unsecured creditors will share in recoveries from a litigation trust. The plan does not contemplate any recovery for existing shareholders, who will no longer have an equity interest in the reorganized company following its emergence.
Speedcast first announced its decision to recapitalize its business through voluntary Chapter 11 proceedings on Apr. 23, 2020. The reasons that were cited were the impact of COVID-19 on its customers’ businesses, a significant percentage of which are in the maritime and oil and gas industries, as well as the worldwide pause in cruise operations.